Causal links between greenhouse gas emissions, economic growth and energy consumption in Pakistan: A fatal disorder of society

This study investigates the long-run and the causal relationship between greenhouse gas emissions, economic growth per unit of energy use and energy consumption in Pakistan by using cointegration theory and Granger causality test. In addition, this study compares the influencing magnitude of greenhouse gas emissions on energy consumption by employing variance decomposition techniques over a 36-year time period, i.e., between 1975 and 2011. The study employed the Johansen cointegration technique to estimate the long-run relationship between the variables, Granger causality test to find the influencing directions while variance decomposition was used to compare the influencing magnitude between the variables. The study was limited to a few variables, including greenhouse gas emissions (such as agricultural methane emissions; agricultural nitrous oxide emissions; CO2 emissions and combustible renewables and waste); GDP per unit of energy use and energy consumption, in order to manage robust data analysis. Finding suggests that energy consumption acts as an important driver for increase in greenhouse gas emissions in Pakistan. The results indicate that on average, causality runs from energy consumption to greenhouse gas emissions but not vice versa. Energy consumption does not Granger cause agricultural nitrous oxide emissions via both routes which confirm ‘neutrality causal hypotheses’ between the variables. Greenhouse gas emissions are closely associated with economic growth per unit of energy use and energy consumption in Pakistan. Variance decomposition analysis shows that among all the greenhouse gas emissions, combustible renewables and waste exerted the largest contribution to changes in energy consumption in Pakistan. The results suggest that consuming energy by industries is becoming more increasing by every coming day, but it signifies the fact that emissions caused by consuming the energy is causing harm to the society by enlarge, and it reaches to the conclusion where we are heading toward a systematic fatal disorder of our society.