Carbon emissions, energy consumption and industrial development

The main objective of this study is to examine the empirical causal relationships between carbon emissions and industrial growth in Bangladesh for the period 1972 to 2015. For such, we applied the ARDL and Granger Causality in VAR Approach. Using three variables growth of carbon emissions, energy consumption and per capita industrial production, the ARDL bounds and additional cross-checking tests convincingly confirmed cointegration between growth of carbon emissions and per capita industrial production (i.e. economic development in other sense). The estimated long and short-run results indicate that, growth in per capita industrial production has significant positive impact, both in the short and long-run, on growth of carbon emissions. The coefficient of the error correction term is statistically significant, has the expected negative sign, and signified a very faster speed of adjustment to equilibrium. Likewise, Granger causality analysis indicated a unidirectional causation both from industrial production and energy consumption to carbon emissions i.e., the industrial development or economic development in Bangladesh is taking place at the cost of carbon emissions.