Energy consumption, CO2 emissions, and economic growth in Korea: A causality analysis

This paper investigates the short- and long-run causality issues among energy consumption, carbon dioxide (CO2) emissions, and economic growth in Korea by applying time-series techniques. It employs annual data covering the period 1971-2008. Tests for unit roots, co-integration, and Granger-causality based on an error-correction model (ECM) are presented. The results show that bidirectional causality exists between economic growth and energy consumption and between energy consumption and CO2 emissions. Moreover, unidirectional causality from CO2 emission to economic growth is detected. These results imply that Korea was dependent on carbon energy consumption for its rapid economic growth in the past, causing considerable CO2 emissions. Korea needs to make a considerable effort in developing energy-efficiency technologies and renewable energy to accomplish green growth with low carbon emissions, which the government has declared to be part of its national agenda.