Environmental degradation: The role of electricity consumption, economic growth and globalisation.

This paper examines the effects of electricity consumption, economic growth and globalisation on the CO 2 emissions of top 10 electricity consuming countries. Taking annual data from 1971 to 2013, a panel cointegration approach is adopted where Fully Modified Ordinary Least Squares (FMOLS) and Dynamic Ordinary Least Squares (DOLS) methods are used to examine the long-run effects. Dumitrescu and Hurlin causality test is used to explore the directions of causality between the variables of interest. The empirical results reveal that there is a long-term association among these variables; and electricity consumption and economic growth positively and significantly affect the CO 2 emissions in these countries. In contrast, globalisation has significant negative impact on the CO 2 emissions implying the improvement of environmental quality. The findings also confirm the existence of the Environmental Kuznets Curve (EKC) hypothesis, the bidirectional causalities between economic growth and CO 2 emissions, between electricity consumption and CO 2 emissions, and between globalisation and economic growth in the sample countries. A unidirectional causality from economic growth to electricity consumption, from electricity consumption to globalisation and from globalisation to CO 2 emissions is also found. Policy guidelines are suggested in line of the findings. • The paper examines the effects of electricity consumption, economic growth and globalisation on the CO 2 emissions. • Fully Modified Ordinary Least Squares and Dynamic Ordinary Least Squares methods are used. • Electricity consumption and economic growth positively and globalisation negatively affect the CO 2 emissions. • Bidirectional causality between CO 2 emissions, and other three main variables is found. • A unidirectional causality from economic growth to electricity use and from globalisation to CO 2 emissions is revealed. [ABSTRACT FROM AUTHOR]