Causality Analysis of the Impacts of Petroleum Use, Economic Growth, and Technological Innovation on Carbon Emissions in Bangladesh

Abstract

Bangladesh has traditionally relied on fossil fuels for meeting its energy demand whereby this major South Asian economy has not been able to safeguard its environment from greenhouse gas emission-related adversities. Moreover, by ratifying several international environmental agreements, especially the Paris Accord and the Sustainable Development Goals, the government of Bangladesh has expressed its solidarity in abating greenhouse gas emissions through the deployment of relevant environmental policies. Hence, this study assesses the impacts of petroleum consumption, economic growth, and technological innovation on carbon emissions in Bangladesh using quarterly frequency data from 1972Q1 to 2020Q4. Overall, apart from confirming the cointegrating relationships among the variables, the regression findings reveal that higher petroleum consumption and economic growth stimulate environmental degradation by boosting carbon dioxide emissions while technological innovation reinstates environmental well-being by curbing the Bangladesh's emission figures. Additionally, technological innovation is seen to moderate the relationship between petroleum consumption and carbon emissions by jointly reducing the emissions with petroleum consumption. Lastly, the causality analysis shows that petroleum consumption, economic growth, and technological innovation causally influence carbon emissions. Based on these key findings, it is recommended that Bangladesh mitigates its petroleum dependency, blends environmental objectives into its economic growth policies, and develops its technological stock.