Energy consumption, Co₂ emission, and economic growth: Evidence from Chile

This article investigates the short- and long-run causality issues among energy consumption, CO₂ emissions, and economic growth in Chile by using time series techniques and annual data for the 1965-2010 period. The results of unit root, co-integration, and Granger-causality tests based on an error-correction model indicate the existence of unidirectional causality from energy consumption to economic growth, from CO₂ emissions to economic growth, and from energy consumption to CO₂ emissions. However, there was no unidirectional causality from economic growth to energy consumption, from CO₂ emissions to energy consumption, and from economic growth to CO₂ emissions. These results suggest that energy consumption can induce economic growth but not vice versa. In addition, Chile is dependent on carbon energy consumption for its rapid economic growth, causing considerable CO₂ emissions. This suggests that Chile should make more effort to develop energy-efficient technologies and renewable energy sources to achieve green growth based on lower CO₂ emissions.