Environmental Kuznets Curve (EKC) in Australia: Evidence from Nonlinear ARDL Model with a Structural Break
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Near East University, Mersin, Turkey
Submission date: 2020-08-06
Final revision date: 2020-09-11
Acceptance date: 2020-09-15
Online publication date: 2021-01-27
Publication date: 2021-03-08
Corresponding author
Cihan Özden   

Near East University, Mersin, Turkey
Pol. J. Environ. Stud. 2021;30(3):2245-2254
In this study, whether economic growth leads to environmental degradation in Australia is analyzed since Australia has been growing consecutively for the last 28 years and is among the countries which are heavily dependent on fossil fuels for energy demands such as oil and coal. In this study, we aim to analyze the EKC hypothesis and the relationships between gross domestic product per capita (GDP in constant 2010 US$), carbon dioxide emissions (CO2 in metric tons per capita), energy consumption (ENE in kg of oil equivalent per capita) and square of GDP by the ARDL model (Autoregressive Distributed Lag Model) and nonlinear ARDL model (NARDL) to investigate whether the increase in economic growth leads to an increase in emissions. The relationships between economic growth and emissions is important since most of the countries in the world aim for economic growth and certain policy requirements should also be analyzed alongside this relationship to make economic growth and emissions relationship compatible. The main results of this study show that no asymmetric and no symmetric relationships are found between GDP and CO2. No causal relationship is found from GDP, square of GDP and ENE to CO2. The EKC hypothesis is not confirmed for Australia. Australia should continue its efforts for decreasing oil consumption, increasing renewable energy generation levels and supporting current market mechanisms which move in favor of renewable energy generation over fossil fuel consumption. Australia can continue its economic growth without concern that reducing CO2 emissions will negatively affect GDP.
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