ENVIRONMENTAL CONSEQUENCES OF ENERGY CONSUMPTION AND NATURAL RESOURCE RENTS: A MACROECONOMIC PERSPECTIVE FROM A DEVELOPING ECONOMY

Abstract

The growing size of carbon emissions is becoming a serious challenge to sustainable environment. The continuous use of traditional nonrenewable energy channels are becoming the primary source of this issue. In order to explore the factors responsible for environmental challenges, this study is designed. Manufacturing value added; renewable energy, fossil fuel energy consumption, oil and natural gas rents have been taken as determining factors of carbon emissions in this research. After utilizing ARDL bounds test on an annual data series from 1990 to 2023, this research suggest that manufacturing value added and nonrenewable energy are significantly increasing carbon emissions and hence leading to worse the environmental quality. The results further uncover that oil rents, renewable energy and natural gas rents are significantly reducing carbon emissions leading to improve environmental sustainability. These findings suggest that promoting environmental friendly energy sources; investing in low carbon generating infrastructure for earning rents from oil and gas sectors and encouraging such practices during manufacturing phase which may help in achieving sustainable environment.