Industrial growth and CO2emissions in Vietnam: the key role of financial development and fossil fuel consumption

The increase in greenhouse gas emission has a major global issue, catching the attention of the researcher and policymakers around the world. The combustion of fossil fuel is the main cause of the rising greenhouse gas emission particularly in developing countries including Vietnam. Meanwhile, the purpose of the study is to evaluate the linkage between fossil fuel consumption, financial development, industrial progression, and CO(2)emission over the period from 1970 to 2019, particularly in Vietnam. The study applied the ARDL econometric technique and Bayer-Hanck cointegration approach with structural break to confirm long run relationship and the EKC hypothesis between industrial growth and CO(2)emission, in Vietnam, which assume the U-shaped link between CO(2)emission and industrial growth in Vietnam. Which further confirmed by Lind and MehlumUtest in addition, the Granger causality exists between fossil fuel consumption and CO(2)emission in both short run and long run. The causal relationship is unidirectional in the short run running from fossil fuel consumption and carbon dioxide emission; therefore, the study proposed to adopt low-carbon emission technology.

Automated summary

The study reveals a U-shaped relationship between industrial growth and CO2 emission in Vietnam, as well as a Granger causality between fossil fuel consumption and CO2 emission in both short and long run, suggesting the adoption of low-carbon emission technology.