Relationship between Energy Consumption, CO2 Emissions, Economic Growth and Trade in India

The purpose of the study is to examine the causal nexus between various sources of energy consumption, viz. Coal, Crude Oil, Electricity and Natural Gas, CO2 emissions, economic growth and trade in India using the Perron unit root test, Gregory and Hansen cointegration test and Vector Error Correction Model. The study exhibits a long-run relationship between various sources of energy consumption, economic growth, CO2 emissions and trade in India. By and large, the empirical results confirm that economic growth fuels rate of various sources of energy consumption i.e. coal, crude petroleum, electricity and natural gas. The findings reveal that increase in CO2 emissions leads to achieve high level of economic activity in India. In addition, the study finds that foreign trade influences the various sources of non-renewable energy consumption in the long-term. However, the energy consumption do not significantly contributes towards promoting foreign trade, except crude petroleum, in the short-run