Impact of financial development, energy consumption and urbanization on CO2 emissions from buildings using quantile ARDL model

Seema Rehman, Saif Ullah, Fahad Azim, Haroon Ur Rasheed Khan

Article ID: 2166
Vol 7, Issue 3, 2023

VIEWS - 915 (Abstract) 364 (PDF)

Abstract


Urbanization plays a crucial role in facilitating the integration of population growth, industrial development, economic expansion, and energy consumption. In this paper, we aim to examine the relationships between CO2 emissions and various factors including economic growth, urbanization, financial development, and energy consumption within Pakistan’s building sector. The study utilizes annual data spanning from 1990 to 2020. To analyze the cointegration relationship between these variables, we employ the quantile autoregressive distributed lag error correction model (QARDL-ECM). The findings of this research provide evidence supporting the presence of an asymmetric and nonlinear long-term relationship between the variables under investigation. Based on these results, we suggest the implementation of tariffs on nonrenewable energy sources and the formulation of policies that promote sustainable energy practices. By doing so, policymakers and architects can effectively contribute to minimising environmental damage. Overall, this study offers valuable insights that can assist policymakers and architects in making informed decisions to mitigate environmental harm while fostering sustainable development.


Keywords


QARDL-ECM; CO2 emission; economic growth; urbanization; energy consumption; financial development; Pakistans

Full Text:

PDF


References


Adebanjo SA, Adeoye OM (2022). Transparency and global initiatives in the face of natural resource depletion in Sub-Saharan Africa. Journal of Environmental Science and Economics 1(2): 13–24. doi: 10.56556/jescae.v1i2.13

Adebanjo SA, Shakiru TH (2022). Dynamic relationship between air pollution and economic growth in Jordan: An empirical analysis. Journal of Environmental Science and Economics 1(2): 30–43. doi: 10.56556/jescae.v1i2.17

Ahmad M, Zhao Z, Li H (2019). Revealing stylized empirical interactions among construction sector, urbanization, energy consumption, economic growth and CO2 emissions in China. Science of the Total Environment 657: 1085–1098. doi: 10.1016/j.scitotenv.2018.12.112

Akalpler E, Hove S (2019). Carbon emissions, energy use, real GDP per capita and trade matrix in the Indian economy—An ARDL approach. Energy 168: 1081–1093. doi: 10.1016/j.energy.2018.12.012

Amber KP, Ahmad R, Farmanbar M, et al. (2021). Unlocking household electricity consumption in Pakistan. Buildings 11: 566. doi: 10.3390/buildings11110566

Aziz N, Sharif A, Raza A, et al. (2020). Revisiting the role of forestry, agriculture, and renewable energy in testing environment Kuznets curve in Pakistan: Evidence from quantile ARDL approach. Environmental Science and Pollution Research 27: 10115–10128. doi: 10.1007/s11356-020-07798-1

Besagni G, Borgarello M (2018). The determinants of residential energy expenditure in Italy. Energy 165: 369–386. doi: 10.1016/j.energy.2018.09.108

Bhutto AW, Bazmi AA, Zahedi G (2011). Greener energy: Issues and challenges for Pakistan—Biomass energy prospective. Renewable and Sustainable Energy Reviews 15(6): 3207–3219. doi: 10.1016/j.rser.2011.04.015

Chen S, Jin H, Lu Y (2019). Impact of urbanization on CO2 emissions and energy consumption structure: A panel data analysis for Chinese prefecture-level cities. Structural Change and Economic Dynamics 49: 107–119. doi: 10.1016/j.strueco.2018.08.009

Cho JS, Kim TH, Shin Y (2015). Quantile cointegration in the autoregressive distributed-lag modeling framework. Journal of Econometrics 188(1): 281–300. doi: 10.1016/j.jeconom.2015.05.003

Cole MA, Elliott RJR (2005). FDI and the capital intensity of dirty sectors—A missing piece of the PH puzzle. Review of Development Economics 9(2–4): 530–548. doi: 10.1111/j.1467-9361.2005.00292.x

Cristobal-Cipriano CM, Arroyo J, Romualdo A (2022). Corporate social responsibility (CSR) programs in Sarangani Province: Promotion of the triple bottom line framework of sustainability. Journal of Environmental Science and Economics 1(2): 67–77. doi: 10.56556/jescae.v1i2.104

Das A, Paul SK (2014). CO2 emissions from household consumption in India between 1993–94 and 2006–07: A decomposition analysis. Energy Economics 41: 90–105. doi: 10.1016/j.eneco.2013.10.019

Galvin R, Sunikkablank M (2013). Economic viability in thermal retrofit policies: Learning from ten years of experience in Germany. Energy Policy 54: 343–351. doi: 10.1016/j.enpol.2012.11.044

Ghafoor GZ, Sharif F, Khan AU, et al. (2020). Energy consumption and carbon dioxide emissions of residential buildings in Lahore, Pakistan. Polish Journal of Environmental Studies 29(2): 1613–1623. doi: 10.15244/pjoes/109305

Godil DI, Ahmad P, Ashraf MS, et al. (2021). The step towards environmental mitigation in Pakistan: Do transportation services, urbanization, and financial development matter? Environmental Science and Pollution Research 28: 21486–21498. doi: 10.1007/s11356-020-11839-0

Godil DI, Sharif A, Agha H, et al. (2020). The dynamic nonlinear influence of ICT, financial development, and institutional quality on CO2 emission in Pakistan: New insights from QARDL approach. Environmental Science and Pollution Research 27: 24190–24200. doi: 10.1007/s11356-020-08619-1

Guan X, Zhou M, Zhang M (2015). Using the ARDL-ECM approach to explore the nexus among urbanization, energy consumption, and economic growth in Jiangsu Province, China. Emerging Markets Finance and Trade 51(2): 391–399. doi: 10.1080/1540496X.2015.1016840

Jamil MN (2022). Critical analysis of energy consumption and its impact on countries economic growth: An empirical analysis base on countries income level. Journal of Environmental Science and Economics 1(2): 1–12. doi: 10.56556/jescae.v1i2.11

Jamil MN, Rasheed A, Mukhtar Z (2022). Corporate social responsibility impact sustainable organizational growth (firm performance): An empirical analysis of Pakistan stock exchange-listed firms. Journal of Environmental Science and Economics 1(2): 25–29. doi: 10.56556/jescae.v1i2.16

Kasman A, Duman YS (2015). CO2 emissions, economic growth, energy consumption, trade and urbanization in new EU member and candidate countries: A panel data analysis. Economic Modelling 44: 97–103. doi: 10.1016/j.econmod.2014.10.022

Khan H, Khan I, BiBi R (2022). The role of innovations and renewable energy consumption in reducing environmental degradation in OECD countries: An investigation for innovation Claudia curve. Environmental Science and Pollution Research 29: 43800–43813. doi: 10.1007/s11356-022-18912-w

Khan H, Liu W, Khan I (2022a). The role of institutional quality in FDI inflows and carbon emission reduction: Evidence from the global developing and belt road initiative countries. Environmental Science and Pollution Research 29: 30594–30621. doi: 10.1007/s11356-021-17958-6

Khan H, Liu W, Khan I (2022b). Examining the effect of information and communication technology, innovations, and renewable energy consumption on CO2 emission: Evidence from BRICS countries. Environmental Science and Pollution Research 29: 47696–47712. doi: 10.1007/s11356-022-19283-y

Khan H, Liu W, Khan I (2022c). The role of financial development and institutional quality in environmental sustainability: Panel data evidence from the BRI countries. Environmental Science and Pollution Research. doi: 10.1007/s11356-022-21697-7

Khan H, Liu W, Khan I, Lei H (2022). The effect of income inequality and energy consumption on environmental degradation: The role of institutions and financial development in 180 world countries. Environmental Science and Pollution Research 29: 20632–20649. doi: 10.1007/s11356-021-17278-9

Khan I, Han L, Bibi R, Khan H (2022a). The role of technological innovations and renewable energy consumption in reducing environmental degradation: Evidence from the Belt and Road initiative countries. Environmental Science and Pollution Research. doi: 10.1007/s11356-022-21006-2

Khan I, Han L, Bibi R, Khan H (2022b). Linking natural resources, innovations, and environment in the Belt and Road initiative countries using dynamic panel techniques: The role of innovations and renewable energy consumption. Environmental Science and Pollution Research 29: 59666–59675. doi: 10.1007/s11356-022-20093-5

Khan SAR, Zhang Y, Anees M, et al. (2018). Green supply chain management, economic growth and environment: A GMM based evidence. Journal of Cleaner Production 185: 588–599. doi: 10.1016/j.jclepro.2018.02.226

Koçak E, Şarkgüneşi A (2017). The renewable energy and economic growth nexus in the black sea and Balkan countries. Energy Policy 100: 51–57. doi: 10.1016/j.enpol.2016.10.007

Le HP, Ozturk I (2020). The impacts of globalization, financial development, government expenditures, and institutional quality on CO2 emissions in the presence of environmental Kuznets curve. Environmental Science and Pollution Research 27(18): 22680–22697. doi: 10.1007/s11356-020-08812-2

Lee S, Lee B (2014). The influence of urban form on GHG emissions in the US household sector. Energy Policy 68: 534–549. doi: 10.1016/j.enpol.2014.01.024

Li X (2018). Linking residential electricity consumption and outdoor climate in a tropical city. Energy 157: 734–743. doi: 10.1016/j.energy.2018.05.192

Liddle B (2010). Age-structure, urbanization, and climate change in developed countries: Revisiting STIRPAT for disaggregated population and consumption related environmental impacts. Population and Environment 31: 317–343. doi: 10.1007/s11111-010-0101-5

Lin B, Liu H (2020). CO2 mitigation potential in China’s building construction industry: A comparison of energy performance. Building and Environment 94: 239–251. doi: 10.1016/j.buildenv.2015.08.013

Liu W, Khan H, Khan I, Lei H (2022). The impact of information and communication technology, financial development, and energy consumption on carbon dioxide emission: Evidence from the Belt and Road countries. Environmental Science and Pollution Research 29: 27703–27718. doi: 10.1007/s11356-021-18448-5

Ma X, Wang C, Dong B, et al. (2019). Carbon emissions from energy consumption in China: Its measurement and driving factors. Science of The Total Environment 648(27): 1411–1420. doi: 10.1016/j.scitotenv.2018.08.183

Maraseni TN, Qu J, Zeng J (2015). A comparison of trends and magnitudes of household carbon emissions between China, Canada and UK. Environmental Development 15: 103–119. doi: 10.1016/j.envdev.2015.04.001

Miao L, Gu H, Zhang X, et al. (2019). Factors causing regional differences in China’s residential CO2 emissions—Evidence from provincial data. Journal of Cleaner Production 224: 852–863. doi: 10.1016/j.jclepro.2019.03.271

Mir KA, Purohit P, Mehmood S (2017). Sectoral assessment of greenhouse gas emissions in Pakistan. Environmental Science and Pollution Research 24: 27345–27355. doi: 10.1007/s11356-017-0354-y

Mishra S, Sharif A, Khuntia S (2019). Does oil prices impede Islamic stock indices? Fresh insights from wavelet-based quantile-on-quantile approach. Resources Policy 62: 292–304. doi: 10.1016/j.resourpol.2019.04.005

Nathaniel S, Khan SAR (2020). The nexus between urbanization, renewable energy, trade, and ecological footprint in ASEAN countries. Journal of Cleaner Production 272: 1–9. doi: 10.1016/j.jclepro.2020.122709

Nathaniel SP, Adeleye N (2021). Environmental preservation amidst carbon emissions, energy consumption, and urbanization in selected African countries: Implication for sustainability. Journal of Cleaner Production 285: 125409. doi: 10.1016/j.jclepro.2020.125409

Ocal O, Aslan A (2013). Renewable energy consumption-economic growth nexus in Turkey. Renewable and Sustainable Energy Reviews 28: 494–499. doi: 10.1016/j.rser.2013.08.036

Pablo-Romero MDP, Sanchez-Braza A (2017). Residential energy environmental Kuznets curve in the EU-28. Energy 125: 44–54. doi: 10.1016/j.energy.2017.02.091

Panayotou T (1993). Empirical tests and policy analysis of environmental degradation at different stages of economic development. ILO Working Paper. International Labour Organization.

Poumanyvong P, Kaneko S (2010). Does urbanization lead to less energy use and lower CO2 emissions? A cross-country analysis. Ecological Economics 70: 434–444. doi: 10.1016/j.ecolecon.2010.09.029

Poumanyvong P, Kaneko S, Dhakal S (2012). Impacts of urbanization on national residential energy use and CO2 emissions: Evidence from low-, middle- and high-income countries. IDEC DP2 Series 2(5): 1–35.

Raheem A, Samo S, Memon A, et al. (2016). Renewable energy deployment to combat energy crisis in Pakistan. Energy, Sustainability and Society 6: 1–13. doi: 10.1186/s13705-016-0082-z

Sarkodie SA, Strezov V (2019). Effect of foreign direct investments, economic development and energy consumption on greenhouse gas emissions in developing countries. Science of the Total Environment 646: 862–871. doi: 10.1016/j. scitotenv.2018.07.365

Shahzad SJH, Kumar RR, Zakaria M, Hurr M (2017). Carbon emission, energy consumption, trade openness and financial development in Pakistan: A revisit. Renewable and Sustainable Energy Reviews 70: 185–192. doi: 10.1016/j.rser.2016.11.042

Shen L, Wu Y, Lou Y, et al. (2018). What drives the carbon emission in the Chinese cities?—A case of pilot low carbon city of Beijing. Journal of Cleaner Production 174: 343–354. doi: 10.1016/j.jclepro.2017.10.333

Sohag K, Begum RA, Abdullah SMS (2015). Dynamic impact of household consumption on its CO2 emissions in Malaysia. Environment, Development and Sustainability 17: 1031–1043. doi: 10.1007/s10668-014-9588-8

Sorrell S (2009). Jevons’ Paradox revisited: The evidence for backfire from improved energy efficiency. Energy Policy 37(4): 1456–1469. doi: 10.1016/j.enpol.2008.12.003

Soytas U, Sari R (2009). Energy consumption, economic growth, and carbon emissions: Challenges faced by an EU candidate member. Ecological Economics 68(6): 1667–1675. doi: 10.1016/j.ecolecon.2007.06.014

Soytas U, Sari R, Ewing BT (2007). Energy consumption, income, and carbon emissions in the United States. Ecological Economics 62(3–4): 482–489. doi: 10.1016/j.ecolecon.2006.07.009

Sultan M, Wu J, Aleem F, Muhammad I (2018). Cost and energy analysis of a grid-tie solar system synchronized with utility and fossil fuel generation with major issues for the attenuation of solar power in Pakistan. Solar Energy 174: 967–975. doi: 10.1016/j.solener.2018.09.052

Sun C, Ouyang X, Cai H, et al. (2014). Household pathway selection of energy consumption during urbanization process in China. Energy Conversion and Management 84: 295–304. doi: 10.1016/j.enconman.2014.04.038

Tanveer A, Song H, Faheem M, et al. (2021). Unveiling the asymmetric impact of energy consumption on environmental mitigation in the manufacturing sector of Pakistan. Environmental Science and Pollution Research 28: 64586–64605. doi: 10.1007/s11356-021-14955-7

The World Bank (2019). Population, total. Available online: https://data.worldbank.org/indicator/SP.POP.TOTL (accessed on 16 August 2023).

Toklu E (2013). Overview of potential and utilization of renewable energy sources in Turkey. Renewable Energy 50: 456–463. doi: 10.1016/j.renene.2012.06.035

Ullah A, Khan D, Khan I, et al. (2018). Does agricultural ecosystem cause environmental pollution in Pakistan? Promise and menace. Environmental Science and Pollution Research 25: 13938–13955. doi: 10.1007/s11356-018-1530-4

Usman A, Ullah S, Ozturk I, et al. (2020). Analysis of asymmetries in the nexus among Pakistan’s clean energy and environmental quality. Environmental Science and Pollution Research 27: 20736–20747. doi: 10.1007/s11356-020-08372-5

Wang Y, Zhao T (2015). Impacts of energy-related CO2 emissions: Evidence from under developed, developing and highly developed regions in China. Ecological Indicators 50: 186–195. doi: 10.1016/j.ecolind.2014.11.010

Wen F, Ye Z, Yang H, Li K (2018). Exploring the rebound effect from the perspective of household: An analysis of China’s provincial level. Energy Economics 7(5): 345–356. doi: 10.1016/j.eneco.2018.08.018

Yousaf M, Lin B (2020). Decoupling and mitigation potential analysis of CO2 emissions from Pakistan’s transport sector. Science of the Total Environment 730: 139000. doi: 10.1016/j.scitotenv.2020.139000

Yuan B, Ren S, Chen X (2015). The effects of urbanization, consumption ratio and consumption structure on residential indirect CO2 emissions in China: A regional comparative analysis. Applied Energy 140: 94–106. doi: 10.1016/j.apenergy.2014.11.047

Zakaria M, Bibi S (2019). Financial development and environment in South Asia: The role of institutional quality. Environmental Science and Pollution Research 26(8): 7926–7937. doi: 10.1007/s11356-019-04284-1

Zhang N, Yu K, Chen Z (2017). How does urbanization affect carbon dioxide emissions? A cross-country panel data analysis. Energy Policy 107: 678–687. doi: 10.1016/j.enpol.2017.03.072

Zubair AO, Samad ARA, Dankumo AM (2020). Does gross domestic income, trade integration, FDI inflows, GDP, and capital reduces CO2 emissions? An empirical evidence from Nigeria. Current Research in Environmental Sustainability 2: 100009. doi: 10.1016/j.crsust.2020.100009




DOI: https://doi.org/10.24294/jipd.v7i3.2166

Refbacks

  • There are currently no refbacks.


Copyright (c) 2023 Seema Rehman, Saif Ullah, Fahad Azim, Haroon Ur Rashid Khan

Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.

This site is licensed under a Creative Commons Attribution 4.0 International License.