The Relationship between CO2 Emission, Non-Renewable Energy Consumption and Economic Growth: A Case of Turkey

In this study, the relationships between carbon dioxide emission, non-renewable energy consumption and economic growth were examined. The analysis covers 25 years of period between 1990-2015 for Turkey. VAR Granger Causality Analysis was employed for the short-term causality analysis. The results indicated that there is a unidirectional relationship from non-renewable energy consumption to CO2 emission in the short-term. The only variable affecting CO2 in the short-term is non-renewable energy consumption. According to the variance decomposition test, in the second period, 13.8% of CO2 emissions were caused by non-renewable energy consumption, 2% was due to economic growth, while in the 8th period, 44% of CO2 emissions were caused by non-renewable energy consumption and 12% from economic growth. This result supports the “Neutrality Hypothesis”, which asserts that there is no direct relationship between energy consumption and economic growth. Since it is revealed a unidirectional causality from NREC to CO2, measures regarding energy consumption will not have a negative impact on economic growth while reducing carbon dioxide emissions in Turkey.