The nexus of electricity consumption, economic growth and CO2 emissions in the BRICS countries

Abstract

This study reexamines the causal link between electricity consumption, economic growth and CO2 emissions in the BRICS countries (i.e., Brazil, Russia, India, China, and South Africa) for the period 1990-2010, using panel causality analysis, which accounts for dependency and heterogeneity across countries. Regarding the electricity-GDP nexus, the empirical results support evidence on the feedback hypothesis for Russia and the conservation hypothesis for South Africa. However, a neutrality hypothesis holds for Brazil, India and China, indicating neither electricity consumption nor economic growth is sensitive to each other in these three countries. Regarding the GDP-CO2 emissions nexus, a feedback hypothesis for Russia, a oneway Granger causality running from GDP to CO2 emissions in South Africa and reverse relationship from CO2 emissions to GDP in Brazil is found. There is no evidence of Granger causality between GDP and CO2 emissions in India and China. Furthermore, electricity consumption is found to Granger cause CO2 emissions in India, while there is no Granger causality between electricity consumption and CO2 emissions in Brazil, Russia, China and South Africa. Therefore, the differing results for the BRICS countries imply that policies cannot be uniformly implemented as they will have different effects in each of the BRICS countries under study.