Determinants of Consumption-Based Carbon Emissions in Chile: Application of Non-Linear ARDL

Abstract

In recent years, a growing number of scholars have employed various proxies of environmental degradation to understand the reasons behind rising environmental degradation. However, very few studies consider consumption-based carbon emissions even though a clear understanding of the impact of consumption patterns is essential to redirecting the pattern to more sustainable consumption. Thus, this study takes a step forward by using consumption-based carbon emissions (CCO2) as a proxy of environmental degradation using the novel non-linear ARDL. To the understanding of the investigators, no prior studies have investigated the drivers of consumption-based carbon emissions utilizing non-linear ARDL. The study employed ADF and KSS (non-linear) tests to check the stationary level of the data series. Additionally, the symmetric and asymmetric ARDL approaches are utilized to explore cointegration and long-run linkages. The results could not find symmetric cointegration among variables; however, the empirical estimates divulge the long-run asymmetric connection of indicators with the CCO2 emissions. The novel results from the asymmetric ARDL unfold that negative and positive changes in economic growth deteriorate the quality of the environment. Interestingly, a reduction in economic growth has a more dominant contribution to environmental degradation. Moreover, positive changes in renewable energy usage improve the quality of the environment in Chile inferring that Chile can achieve a reduction in environmental degradation by boosting renewable energy consumption. Surprisingly, the study found the ineffectiveness of technological innovation in reducing consumption-based carbon emissions which implies that technological innovation in Chile is not directed towards manufacturing green technology. Finally, the policy implications are discussed to reduce consumption-based carbon emissions.

The asymmetric effect of renewable energy and trade on consumption‐based CO2emissions: The case of Italy

“…Temporary changes in tiny sample data can be removed using the frequency domain. Furthermore, the frequency domain technique can distinguish between nonlinearity and causality levels and demonstrate causality between variables with various frequencies (Adebayo, Udembo, et al, 2021).…”

The influence of renewable energy usage on consumption-based carbon emissions in MINT economies

“…The authors found that GDP positively influences CCO 2 . Using the NARDL, the study conducted on Chile by Adebayo et al [43] over the period from 1990 to 2018 found that both negative and positive variations in GDP contribute to CCO 2 in Chile. For Japan, the investigation of [44] using quarterly data ranging from 1990Q1-2015Q4 established the presence of a positive interconnectedness between CO 2 and GDP.…”

Consumption‐based carbon emissions, renewable energy consumption, financial development and economic growth in Chile

“…Furthermore, Chile ratified the Paris Agreement of 2015 and started to take the necessary steps to mitigate GHG emissions at a national level. Renewable energy investments have also been increased recently, and it seems that Chile is one of the few countries that is likely to meet its emission reduction targets (Adebayo et al, 2021; Benavente, 2016; Cansino et al, 2018; Simsek et al, 2020). Chile is also an emerging market engaging in international trade, which fits into our research as a good example.…”