Dynamic linkages among transport energy consumption, income and CO2 emission in Malaysia

Abstract

We examine the dynamic relationship among energy consumption in transportation sector, income and CO 2 and also attempts to validate the environmental Kuznet curve (EKC) hypothesis. We used a multivariate approach based on VECM. The inverted U-shape EKC hypothesis is not valid in the case of Malaysia. Uni-directional causality exists from emission to income, energy consumption and renewable energy use. Income Granger-causes energy consumption and renewable energy use, and both structural change and renewable energy use Granger-cause energy consumption in road transportation. a r t i c l e i n f o b s t r a c tThis paper examines the dynamic relationship between income, energy use and carbon dioxide (CO 2 ) emissions in Malaysia using time-series data during 1975 to 2011. This study also attempts to validate the environmental Kuznet curve (EKC) hypothesis. Applying a multivariate model of income, energy consumption in the transportation sector, carbon emissions, structural change in the economy and renewable energy use, the empirical evidence confirmed that there is a long-run relationship between the variables as shown by the result of co-integration analysis. The results indicate that the inverted U-shape EKC hypothesis does not fully agree with the theory. The coefficient of squared GDP is not statistically different from zero. The time duration and the annual data used for the present study do not seem to strongly validate the existence of EKC hypothesis in the case of Malaysia. Causality test shows that the relationship between GDP and CO 2 is unidirectional. The Granger causality test results reveal that emissions Granger-cause income, energy consumption and renewable energy use. Moreover, we find that income Granger-causes energy consumption and renewable energy use, and both structural change and renewable energy use Granger-cause energy consumption in road transportation.

Modeling the nexus between carbon dioxide emissions and economic growth

“…The second reason is the different collections of data categories for the object under study, as observed in the different results for Malaysia (Lau et al, 2014;Azlina et al, 2014), Tunisia (Fodha and Zaghdoud, 2010;Shahbaz et al, 2014), and Turkey (Halicioglu, 2009;Akbostanci et al, 2009).…”

An Analysis of Decoupling and Influencing Factors of Carbon Emissions from the Transportation Sector in the Beijing-Tianjin-Hebei Area, China

“…Conversely, the effect of energy intensity contributed significantly to decreasing the emissions. Chandran and Tang [40] found that energy consumption in the road transportation sector significantly contributes to environmental pollution (particularly CO 2 emissions) in Malaysia [41]. Ong et al [42] maintained that the transportation sector is contributing to a growing share of carbon emissions in Malaysia.…”

CO2-GDP NEXUS: Case for ASEAN 5

“…If emission is found to Granger-cause economic growth, any policies that decrease CO2 emissions will lead to a reduction in economic growth. It may be possible to reduce emission without having a negative impact on economic growth, Azlina et al (2014). This research lead to further studies on environmental economics to curb the increase of global carbon emissions effectively, and solving global warming problem by not adding the expense of declining economic development and people's living standards.…”

“…Granger causality test were applied and the relationship between CO2 emissions and income not support the empirical literature of EKC hypothesis. Azlina et al (2014) try to validate the EKC hypothesis by applying a multivariate model, but that there is no causal found between incomes over emission. Halicioglu (2009) on his research for Turkey suggested that income is the most significant variables to relate the carbon emissions.…”

“…Balcila et al (2014) investigate the causality between economic growth and tourist receipts using ARDL-Bounds approach. Azlina et al (2014) investigated the causal relationships between energy consumption, economic growth and pollutant emissions for Malaysia using series co-integration and vector error correction to test the causality. Cointegration analysis was conducted to see the long run relationship between CO2 emissions and GDP, while the VECM technique was to test the short-run dynamics of the variables.…”