India's Green Growth Puzzle: Decoding the interplay between carbon dioxide emissions, energy mix and GDP

Abstract We show the dynamic relation between environmental degradation, energy composition, and economic growth in India, utilizing annual data from 1985 to 2022. Our research illuminates a robust, long-term equilibrium relationship among these pivotal variables. Notably, our findings underscore the pivotal role of renewable energy adoption and strategic enhancements in energy efficiency as potent strategies for curtailing CO2 emissions. In addition, we emphasize the imperative of diversifying the energy portfolio and reducing dependence on fossil fuels. Moreover, our Granger causality analysis unveils dynamic interdependencies among these variables, enriching our comprehension of their temporal dynamics. Building upon these compelling results, we proffer a comprehensive set of evidence-based policy recommendations, encompassing the incentivization of renewable energy sources, the augmentation of energy efficiency measures, the introduction of carbon pricing mechanisms, and the steadfast pursuit of sustainable development objectives. This synthesis of findings, intricately coupled with the robust VECM methodology, equips policymakers with invaluable insights to navigate the multifaceted landscape of sustainable development in the dynamic Indian context.