Carbon emissions, energy consumption, and economic growth relationship in Sri Lanka

Abstract

This study attempts to investigate the long-run Granger causality relationship between energy consumption, carbon emissions, economic growth, and trade openness in Sri Lanka. Our analysis reveals that, there exists long-run causal relationship between carbon emission and economic growth for Sri Lanka over the period of 1971-2006. In addition, there is unidirectional causality running from economic growth to the carbon emission and energy consumption. The result implies that carbon emission reduction policies will hurt economic growth if no supplementary policies are taken to modify this causal relationship.