Nexus between Carbon Dioxide (CO2) Emission and Energy use in Sri Lanka

Jeyapraba Suresh; Vinayagamoorthy Vasantha

doi:10.98765/ajmesc.v2i04.146

Jeyapraba Suresh Faculty of Commerce and Management, Eastern University, SRI LANKA
Vinayagamoorthy Vasantha Faculty of Commerce and Management, Eastern University, SRI LANKA

DOI: https://doi.org/10.98765/ajmesc.v2i04.146

Keywords: Co2 Emission, Energy usage, cointegration

Abstract

This study investigates the long-run and short-run relationship between the annual CO₂ emission and energy use per person in Sri Lanka. The study applied the Residual Based Test using data from 1985 to 2020. According to the Augmented Dickey-Fuller Test, all the series appear stationary in the first difference for the logarithm form at a 1 per cent significance level. The residual was significant at its level. The results strongly support the conclusion that co-integration between the two variables exists in the long term. The study found a positive relationship between CO₂ emission and energy use in Sri Lanka. The fitted model was confirmed through the Normality Test, Serial Correlation Test, Heteroskedasticity Test and Recursive estimates. Error Correction Model (ECM) results found a positive relationship among the variable in the short term. Hence, energy usage is the most critical factor on CO₂emissions. While Sri Lanka has been facing a severe energy crisis in 2022, this study suggests using renewable and alternative energy resources like solar to sustain the environment.

References

Ang, J. B. (2007). CO2 emissions, energy consumption, and output in France. Energy Policy, 35(10), 4772–4778. https://doi.org/10.1016/j.enpol.2007.03.032.
Asafu-Adjaye, J. (2000). The relationship between energy consumption, energy prices and economic growth: time series evidence from Asian developing countries. Energy Economics, 22(6), 615–625. https://doi.org/10.1016/s0140-9883(00)00050-5.
Chontanawat, J. (2020). Relationship between energy consumption, CO2 emission and economic growth in ASEAN: Cointegration and causality model. Energy Reports, 6, 660–665. https://doi.org/10.1016/j.egyr.2019.09.046.
Climatelinks. (2016). Greenhouse Gas Emissions Factsheet: Sri Lanka. Available on: (https://www.climatelinks.org/resources/greenhouse-gas-emissions-factsheet-sri-lanka).
Global Energy Review (2021), Assessing the effects of economic recoveries on global energy demand and CO2 emissions in 2021. https://iea.blob.core.windows.net/assets/d0031107-401d-4a2f-a48b-9eed19457335/GlobalEnergyReview2021.pdf
Ngan Thao, N.T, and Van Chon, L. (2016). Nonrenewable, renewable energy consumption and economic performance in OECD countries: A stochastic distance function approach. University of Economics Ho Chi Minh City; VNP.
Pao, H. T., Yu, H. C., & Yang, Y. H. (2011). Modelling the CO2 emissions, energy use, and economic growth in Russia. Energy, 36(8), 5094–5100. https://doi.org/10.1016/j.energy.2011.06.004.
Sadorsky, P. (2009). Renewable energy consumption, CO2 emissions and oil prices in the G7 countries. Energy Economics, 31(3), 456–462. https://doi.org/10.1016/j.eneco.2008.12.010.
Shahbaz, M. Muhammad, Z., & Kumar, T.A. (2011). Analysis of renewable and nonrenewable energy consumption, real GDP and CO2 emissions: a structural VAR approach in Romania. MPRA Paper 2011 No. 34066.
Sasana, H., & Eka Putri, A. (2018). The Increase of Energy Consumption and Carbon Dioxide (CO2) Emission in Indonesia. E3S Web of Conferences, 31, 01008. https://doi.org/10.1051/e3sconf/20183101008.
Worldmeter, (2018). Sri Lanka Energy, https://www.worldometers.info/energy/sri-lanka-energy/
Yang, H. Y. (2000b). A note on the causal relationship between energy and GDP in Taiwan. Energy Economics, 22(3), 309–317. https://doi.org/10.1016/s0140-9883(99)00044-4