Environmental Kuznets Curve (EKC) in Australia: Evidence from Nonlinear ARDL Model with a Structural Break

Abstract

In this study, whether economic growth leads to environmental degradation in Australia is analyzed since Australia has been growing consecutively for the last 28 years and is among the countries which are heavily dependent on fossil fuels for energy demands such as oil and coal. In this study, we aim to analyze the EKC hypothesis and the relationships between gross domestic product per capita (GDP in constant 2010 US$), carbon dioxide emissions (CO 2 in metric tons per capita), energy consumption (ENE in kg of oil equivalent per capita) and square of GDP by the ARDL model (Autoregressive Distributed Lag Model) and nonlinear ARDL model (NARDL) to investigate whether the increase in economic growth leads to an increase in emissions. The relationships between economic growth and emissions is important since most of the countries in the world aim for economic growth and certain policy requirements should also be analyzed alongside this relationship to make economic growth and emissions relationship compatible. The main results of this study show that no asymmetric and no symmetric relationships are found between GDP and CO 2. No causal relationship is found from GDP, square of GDP and ENE to CO 2. The EKC hypothesis is not confirmed for Australia. Australia should continue its efforts for decreasing oil consumption, increasing renewable energy generation levels and supporting current market mechanisms which move in favor of renewable energy generation over fossil fuel consumption. Australia can continue its economic growth without concern that reducing CO 2 emissions will negatively affect GDP.

The Relationship Between Economic Growth, Energy Consumption and CO2 Emission in the Middle East and North Africa (MENA)

“…He found the positive effects of income and energy use on the CO 2 emissions. This result is shared by other authors, such as the study of (Ang, 2007b;Soytas, Sari, Ewing, 2007;Sotyas, Sari, 2009;Bhat, 2018;Muhammad, Khan, Rehan, 2020;Cihan, Emrah, 2021;Gessesse, He 2020;Zhang, Jihuan, 2021).…”

EKC Test of the Relationship between Nitrogen Dioxide Pollution and Economic Growth—A Spatial Econometric Analysis Based on Chinese City Data

“…Sinha et al [ 18 ] discussed the relationship between energy use isolation and environmental degradation in N-11 countries, and showed that for these countries the relationship between income and carbon emissions is an N-shaped model, not an inverted U-shaped model. After studying the relationship between Australian GDP and carbon dioxide, Özden and Beşe [ 19 ] did not find a significant relationship between GDP and the square of GDP and carbon dioxide, indicating that the EKC hypothesis is not valid.…”

Analysis of Coal Consumption and Growth Nexus by Environmental Kuznets Curve

“…Purcel suggested that developing and transitional economies should contribute more efforts for climate change to support developed countries. Özden and Beşe (2021) analyzed the EKC hypothesis in Australia by linear and nonlinear cointegration models. Özden and Beşe did not confirm the EKC hypothesis in Australia.…”