Ecological Economics 69 (2010) 2255–2260

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Ecological Economics
j o u r n a l h o m e p a g e : w w w. e l s ev i e r. c o m / l o c a t e / e c o l e c o n

Analysis

On the causal dynamics between emissions, nuclear energy, renewable energy, and
economic growth☆
Nicholas Apergis a, James E. Payne b,⁎, Kojo Menyah c, Yemane Wolde-Rufael d
a
Department of Banking and Financial Management, University of Piraeus, Karaoli and Dimitriou 80, Piraeus, ATTIKI 18534, Greece
b
Department of Economics, Illinois State University, Normal, IL 61790-4200, United States
c
London Metropolitan Business School, London Metropolitan University, 84 Moorgate, London, EC2M 6SQ, United Kingdom
d
135 Carnwath Road, London SW6 3HR, UK

a r t i c l e i n f o a b s t r a c t

Article history: This paper examines the causal relationship between CO2 emissions, nuclear energy consumption, renewable
Received 23 January 2010 energy consumption, and economic growth for a group of 19 developed and developing countries for the
Received in revised form 16 June 2010 period 1984–2007 using a panel error correction model. The long-run estimates indicate that there is a
Accepted 17 June 2010
statistically significant negative association between nuclear energy consumption and emissions, but a
Available online 6 July 2010
statistically significant positive relationship between emissions and renewable energy consumption. The
results from the panel Granger causality tests suggest that in the short-run nuclear energy consumption
Keywords:
Emissions
plays an important role in reducing CO2 emissions whereas renewable energy consumption does not
Nuclear energy contribute to reductions in emissions. This may be due to the lack of adequate storage technology to
Renewable energy overcome intermittent supply problems as a result electricity producers have to rely on emission generating
Economic growth energy sources to meet peak load demand.
© 2010 Elsevier B.V. All rights reserved.

1. Introduction countries would mean rapidly increasing dependency on fossil fuels,

In the last few years many countries have been confronted with the
challenge of producing more energy to meet their growing energy
demand while at the same time grappling with the issue of reducing
greenhouse gas emissions. It is generally believed that unless dramatic
actions are taken to reduce global warming, the world could face an
environmental catastrophe (Stern, 2007; Adamantiades and Kessides,
2009; DeCanio, 2009; Reddy and Assenza, 2009). The International
Energy Agency (IEA, 2003, 2009a) suggests that current trends in
energy supply and use are patently unsustainable — economically,
environmentally and socially. Without decisive action, energy-related
emissions of CO2 will more than double by 2050 and increased oil
demand will heighten concerns over the security of supplies (IEA,
2009a). Nobuo Tanaka, Executive Director, IEA, 2009b, emphasized
this prognosis as follows: “The message is simple and stark: if the
world continues on the basis of today's energy and climate policies, the
consequences of climate change will be severe. Energy is at the heart of
the problem — and so must form the core of the solution.” Hence, the
analysis so far suggests that continuing along today's energy path,
without change in government policy by the major energy consuming
☆ The authors appreciate the comments of the editor and referees.
⁎ Corresponding author. Tel.: +1 309 438 5669.
E-mail addresses: napergis@unipi.gr (N. Apergis), jepayne@ilstu.edu (J.E. Payne),
k.menyah@londonmet.ac.uk (K. Menyah), ywolde@gmail.com (Y. Wolde-Rufael).
with alarming consequences for climate change.
The energy security problem facing energy-importing countries is
equally daunting (Hedenus et al., 2010). The concentration of energy
sources in the volatile region of the Middle East involves risks for
many countries in terms of the reliability of the supply of energy
(Gnansounou, 2008). Energy security and environmental challenges
are forcing many countries to find energy alternatives to fossil fuels.
Both renewable and nuclear energy sources are believed to provide
some solutions to the problems of energy security and environmental
degradation. Consequently, many countries have made investments
in nuclear and renewable energy as a means to reduce dependence on
imported oil, increase the supply of secure energy, minimize the price
volatility associated with imported fossil fuels, and reduce greenhouse
gas emissions (Toth and Rogner, 2006; Vaillancourt et al., 2008;
Adamantiades and Kessides, 2009). Many believe that both nuclear
and renewable energy, as virtually carbon free energy sources, could
provide a major solution to global warming and energy security issues
(Elliott, 2007; Ferguson, 2007). Even countries weary about the use of
nuclear energy are now showing an interest in developing nuclear
energy in order to diversify energy supplies, improve energy security,
and provide a low-carbon energy alternative to fossil fuels (IEA, 2008;
Adamantiades and Kessides, 2009).
While the increasing threat of global warming and climate change
have drawn attention to the relationship between economic growth
and environmental pollutants, research that looks into the impact of

0921-8009/$ – see front matter © 2010 Elsevier B.V. All rights reserved.
doi:10.1016/j.ecolecon.2010.06.014
2256 N. Apergis et al. / Ecological Economics 69 (2010) 2255–2260
nuclear and renewable energy as possible panacea for emission
reductions has been conspicuous by its absence. To date, empirical
research has focused on investigating the causal relationship between
energy consumption and economic growth, on the one hand, and
between energy consumption and pollutant emissions on the other
(Coondoo and Dinda, 2002; Dinda, 2004; Soytas et al., 2007;
Chontanawat et al., 2008; Aslanidis and Iranzo, 2009; Apergis and
Payne, 2009, 2010a); Sadorsky, 2009a; Sari and Soytas, 2009; Soytas
and Sari, 2009; Ozturk, 2010; Payne, 2009, 2010a,b). There is a dearth
of empirical research that looks into the causal relationship between
nuclear energy consumption, renewable energy consumption, and CO2
emissions using modern advances in time series econometrics
associated with causality testing. The purpose of this study is to fill
this gap by investigating the causal link between nuclear energy
consumption, renewable energy consumption, CO2 emissions, and
economic growth for a group of 19 developed and developing
countries for the period 1984–2007 within a panel error correction
model framework. The main reason for studying the relationship
between carbon emissions, nuclear energy and renewable energy is
that both nuclear and renewable energy play an important role in the
current debate on environmental protection and sustainable devel-
opment. To our knowledge, this is the first study to use a
heterogeneous panel error correction model to explore the causal
relationships between nuclear and renewable energy consumption,
CO2 emissions, and economic growth. This allows us to draw
conclusions from the analysis which may be applicable to a broad
range of countries. This is important in light of the fact that there is a
global effort to find ways of reducing emissions and the role of various
energy sources in helping to achieve such an objective.
In the light of the discussion above, the rest of the study is
organized as follows. Section 2 briefly discusses the potential role of
nuclear and renewable energy in mitigating emissions. Section 3
describes the data and methodology along with the empirical
evidence. Concluding remarks are presented in Section 4.
2. Potential Role of Nuclear and Renewable Energy in Mitigating
CO2 Emissions
Nuclear energy plays an important role not only in meeting the
energy needs of many countries, but also in mitigating emissions.
According to Adamantiades and Kessides (2009) the worldwide
operation of nuclear plants makes a significant contribution to the
mitigation of greenhouse gas emissions where nuclear plants
currently save some 10% of CO2 emissions from world energy use.
Nuclear power plants have played a major role in reducing the
amount of greenhouse gas emissions produced by the electricity
sector in OECD countries (Nuclear Energy Agency, 2002). Further-
more, it is claimed that without nuclear power, OECD power plant
carbon dioxide emissions would have been about one-third higher.
Moreover, the European Union (2006) argues that Europe would not
have been able to make any significant impact on reducing CO2
emissions without the use of nuclear energy.
Like nuclear energy, renewable energy offers significant opportu-
nities for further growth that can facilitate the transition to a global
sustainable energy supply by the middle of this century (IEA, 2009a).
In 2004, renewable energy accounted for 13.1% of world total primary
energy supply. The use of non-hydro emerging renewable energy
sources (wind, solar, geothermal, tidal, wave, and bio-energy)
exhibits the fastest rate of increase, with most of the increase in
power generation. The share of non-hydro renewable energy in total
power output is expected to rise from 2.5% in 2007 to 8.6% in 2030,
with wind power having the largest absolute increase (IEA, 2009a).
According to the most optimistic scenario created by the IEA, by 2050,
the share of renewable energy in the electricity generation mix could
increase from 18% in 2004 to 39% by 2050. Renewable energy also
serves a vital role in the global 50% CO2 reduction target by 2050 if the
long-term mean global temperature rise is to be limited to between 2
and 2.4 °C (IEA, 2009a). In contrast, nuclear energy is envisaged to
contribute to only 6% of the global CO2 reduction target by 2050. This
is largely due to long lead times, high capital costs and public
opposition to nuclear power in some countries. Nevertheless, both
nuclear and renewable energy can potentially play a pivotal role not
only in energy supplies, but also in emission reductions.
3. Data, Methodology, and Results
Annual data from 1984 to 2007 was obtained from the World Bank
Development Indicators, CD-ROM and the Energy Information Adminis-
tration for Argentina, Belgium, Brazil, Bulgaria, Canada, Finland, France,
Hungary, India, Japan, Netherlands, Pakistan, South Africa, South
Korea, Spain, Sweden, Switzerland, U.K., and the U.S. The multivariate
framework for the analysis includes real GDP (Y) in billions of constant
2000 U.S. dollars, nuclear electricity net consumption (N) in millions of
kilowatt hours, total renewable electricity net consumption (R) in
millions of kilowatt hours, and total carbon dioxide emissions (E) from
energy consumption in millions of metric tons.
The analysis begins with the examination of the stationarity
properties of the variables by employing a battery of panel unit root
tests.1 Levin et al. (2002) propose a panel based ADF test with
homogeneity in the dynamics of the autoregressive coefficients for all
panel units with cross-sectional independence. The Im et al. (2003)
panel unit root test differs from Levin et al. (2002) by allowing for
heterogeneity in the dynamics of the autoregressive coefficients for all
panel units. Finally, the nonparametric panel unit root tests of
Maddala and Wu (1999) which combine the p-values from individual
unit root tests are estimated using the Fisher–ADF and Fisher–PP tests.
For each panel unit root test the null hypothesis is a unit root while
the alternative hypothesis is no unit root. Table 1 displays the results
of the panel unit root tests which indicate that each variable is
integrated of order one.
To determine whether the variables are cointegrated, the Larsson
et al. (2001, hereafter LLL) procedure is employed. The LLL(2001)
procedure parallels the Johansen (1988) methodology within a panel
error correction model framework and offers several advantages over
residual-based cointegration tests. First, the LLL (2001) procedure
allows for more than one cointegrating vector unlike, for instance,
Pedroni (1999, 2004) which assumes there is only one cointegrating
vector. Second, using the LLL (2001) method, no choice has to be
made with respect to the normalization of variables. Finally, while the
cointegrating relations are restricted to each cross-section, the rest of
the model is unrestricted which allows for short-run dependence
between the groups, the most appealing of which is that of cross-
sectional dependence of the error terms.
To begin the analysis one must determine whether the Π matrix is
of reduced rank and whether all N groups can each be characterized
by r cointegrating vectors. If cointegration is found, the next step is to
determine whether or not the cointegrating vectors are homoge-
neous. LLL (2001) consider testing for cointegration under the
assumption that Πi = αiβ′i = αβ′ = Π for i = 1, . . , N. The null
hypothesis of the LLL test is H0:rk(Πi) = k for i = 1, . . . , N against
the alternative hypothesis that H1:rk(Πi) = m for a non-vanishing
fraction of cross-section members. This test statistic is similar to that
of Im et al. (2003) and is given by a centered and scaled version of the
cross-sectional average of the individual trace statistics. LRsi (k|m)
denotes the trace statistic for the null hypothesis of a k-dimensional
cointegrating space for unit i where the superscript s indicates the
specification of the deterministic components. Using the central limit
1
To conserve space, the details of the panel unit root and stationarity tests have
been omitted.
 N. Apergis et al. / Ecological Economics 69 (2010) 2255–2260 2257

Table 1 Table 2
Panel unit root tests 1984–2007. Panel cointegration tests and long-run parameter estimates 1984-2007.

Variables Panel test Levels First differences Panel A: LLL panel cointegration tests

E LLC − 0.51 − 5.05a Null hypothesis LR test 5% critical values (bootstrapped)

IPS − 0.36 − 5.02a
Cointegrating rank
Fisher-ADF 21.67 67.84a
H0:r = 0 64.78a 25.66
Fisher-PP 21.66 80.57a
H0:r = 1 24.59 97.67
N LLC − 0.46 − 7.12a
Homogeneous cointegration vectors
IPS − 0.44 − 6.20a
H0:b1 = b2 = ... = bN 72.16a 29.84
Fisher-ADF 16.33 75.44a
H0:B block diagonal 58.36 74.58
Fisher-PP 27.69 103.27a
Notes: Larsson et al. (2001) cointegration procedure denoted by LLL. Significance at
the 5% level is denoted by “a”.
R LLC − 0.75 − 6.47a
IPS − 0.63 − 7.11a Panel B: LLL long-run parameter estimates
Fisher-ADF 21.26 78.05a
Fisher-PP 29.86 123.45a E = 0:763 −0:477N + 1:459R + 0:784Y
ð5:24Þa ð−7:44Þa ð7:82Þa ð8:35Þa
Y LLC − 0.57 − 6.84a Adj: R2 = 0:71 LM = 0:64 HE = 0:53
IPS − 0.44 − 7.01a ½0:57 ½0:61
Fisher-ADF 20.43 82.37a Notes: t-statistics and probability values are reported in parentheses and brackets,
Fisher-PP 23.47 112.49a respectively. LM is the Lagrange multiplier test for serial correlation. HE is
White's heteroscedasticity test. Significance at the 1% level is denoted by “a”.
Notes: Levin et al. (2002) LLC; Im et al. (2003) IPS; Maddala and Wu (1999) Fisher-ADF
and Fisher-PP. Critical values at the 1% level denoted by “a”: LLC − 6.99, IPS − 3.96,
Fisher-ADF 56.81, and Fisher-PP 61.15.
Panel B of Table 2 reports the long-run parameter estimates
associated with the cointegrating vector based on the LLL (2001)
procedure. The coefficients are positive and statistically significant at
theorem in the cross-sectional dimension and the appropriate mean the 1% level for renewable energy consumption and real output,
and variance correction factors implies that under the null hypothesis: respectively; however, the coefficient is negative and statistically
qffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffi significant at the 1% level for nuclear energy consumption. Given that
N 2 ∑Ni= 1 ðLRsi ðk jmÞ−EðLRsi ðkjmÞÞ the coefficients can be interpreted as elasticity estimates, the results
s
LLL ðkjmÞ = pffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffi ffi →Nð0; 1Þ ð1Þ indicate that a 1% increase in nuclear energy consumption decreases
VarðLRsi ðk jmÞÞ
emissions by 0.477%; a 1% increase in renewable energy consumption
increases emissions by 1.459%; and a 1% increase in real output
in the sequential limit T → ∞ followed by N → ∞. E(LRsi (k|m)) and increases emissions by 0.784%.5
Var(LRsi (k|m)) represent the mean and variance of the asymptotic trace Next, a panel vector error correction model is estimated in order to
statistics, respectively obtained from a stochastic simulation (Johansen, infer the causal relationship among the variables in question. Defining
1995). For T → ∞ the expressions E(LRsi (k|m)) and Var(LRsi (k|m)) the lagged residuals from the long-run cointegration equation stated
converge to the limit of the expected value and variance of the trace in Panel B of Table 2, the following dynamic error correction model is
statistic, respectively, corresponding to the case s considered.2 estimated:
For each country in the panel the null hypothesis, r = 0, is tested
using the observed trace statistic. If the null hypothesis is rejected,
then the null hypothesis, r = 1, is tested. This sequential testing ΔEit = ξ1j + ∑qk = 1 ψ11ik ΔEit−k + ∑qk = 1 ψ12ik ΔNit−k
procedure ends when the null hypothesis, r = ri, is not rejected which
+ ∑qk = 1 ψ13ik ΔRit−k + ∑qk = 1 ψ14ik ΔYit−k + λ1i εit−1 + u1it
determines the rank estimate of r. For determining the panel trace
test, the statistic LRsi (k|m), as noted in Eq. (1), is obtained by ð2aÞ
standardizing the average of the N countries' individual trace
statistics. If cointegration is present, the method allows one to test ΔNit = ξ2j + ∑qk = 1 ψ21ik ΔEit−k + ∑qk = 1 ψ22ik ΔNit−k
whether the cointegrating vector is homogeneous across countries.
Furthermore, the LLL (2001) procedure provides a robust test of the + ∑qk = 1 ψ23ik ΔRit−k + ∑qk = 1 ψ24ik ΔYit−k + λ2i εit−1 + u2it
presence of cointegration that can be conducted with cross-sectional ð2bÞ
dependence in the error terms of the panel without arbitrary
normalization assumptions.3 ΔRit = ξ3j + ∑qk = 1 ψ31ik ΔEit−k + ∑qk = 1 ψ32ik ΔNit−k
As shown in Panel A of Table 2, the panel rank (LR) test results
reject the null of no cointegration. Given the presence of panel + ∑qk = 1 ψ33ik ΔRit−k + ∑qk = 1 ψ34ik ΔYit−k + λ3i εit−1 + u3it
cointegration with one cointegrating vector, the null hypothesis of a ð2cÞ
homogeneous cointegrating vector is tested. Panel A of Table 2 reveals
q q
that the null of homogeneous cointegrating vectors is rejected as the ΔYit = ξ4j + ∑k = 1 ψ41ik ΔEit−k + ∑k = 1 ψ42ik ΔNit−k
test statistic, 72.16, exceeds the critical value of 29.84. Thus, the LLL
(2001) panel test for cointegration indicates a common rank, r = 1, + ∑qk = 1 ψ43ik ΔRit−k + ∑qk = 1 ψ44ik ΔYit−k + λ4i εit−1 + u4it
between emissions, nuclear energy consumption, renewable energy ð2dÞ
consumption, and real output.4
where Δ is the first-difference operator; k is the lag length set at two
2
Finite T correction factors (for different lag lengths and the number of variables) based on likelihood ratio tests; and u is the serially uncorrelated error
can be obtained by simulation and performed in this study (Im et al., 2003). term. With respect to Eqs. (2a)–(2d), short-run causality is
3
The residual-based cointegration test of Pedroni (1999, 2004) is sensitive to both
the usage of time dummies to account for potential cross-sectional dependence and
variable normalization.
4 5
The authors thank Dr. Chris Tsoumas for providing the software routine for the Iwata et al. (2009) report the estimated long-run elasticity of CO2 emissions on
Larsson et al. (2001) panel cointegration test. nuclear energy consumption ranged from −0.21 to −0.31 in the case of France.
2258 N. Apergis et al. / Ecological Economics 69 (2010) 2255–2260
Table 3
Panel causality tests 1984–2007.
Dependent Sources of causation (independent variables)
variable
Short-run
ΔE ΔN
(2a) ΔE – 62.09 (− 0.082)
[0.00]a [0.00]a
(2b) ΔN 36.16 (0.409) – 1.74
[0.00]a [0.00]a
(2c) ΔR 66.46 (− 0.147) 63.83 (− 0.160)
[0.00]a [0.00]a [0.00]a [0.00]a
(2d) ΔY 58.20 (0.246) 85.31 (− 0.074)
[0.00]a [0.00]a [0.41] [0.07]c
Notes: partial F-statistics reported with respect to short-run changes in the independent variables. The sum of the lagged coefficients for the respective short-run changes is denoted
in parentheses. ECT represents the coefficient of the error correction term. Probability values are in brackets and reported underneath the corresponding partial F-statistic and sum of
the lagged coefficients, respectively. Significance at the 1%, 5%, and 10% levels are denoted by “a”, “b”, and “c”.
determined by the statistical significance of the partial F-statistic
associated with the corresponding right hand side variables. Long-run
causality is determined by the statistical significance of the respective
error correction terms using a t-test.
The results of the short-run and long-run Granger causality tests
are reported in Table 3. Eq. (2a) shows that renewable energy
consumption and economic growth each have a positive and
statistically significant impact on emissions in the short-run while
nuclear energy consumption has a negative and statistically signifi-
cant impact. In terms of Eq. (2b), emissions and economic growth
each have a positive and statistically significant impact on nuclear
energy consumption whereas renewable energy consumption has a
statistically insignificant impact. In the case of Eq. (2c), both emissions
and nuclear energy consumption each have a significant negative
impact on renewable energy consumption while economic growth
has a positive and statistically significant impact. In regard to Eq. (2d),
both emissions and renewable energy consumption each have a
positive and statistically significant influence on economic growth
whereas nuclear energy consumption has a negative and statistically
significant impact.
One of the most important results that emerge from the short-run
causality tests presented in Table 3 is that these tests show that nuclear
energy plays an important role in reducing CO2 emissions. Nuclear
energy consumption has a negative and statistically significant impact
on emissions. Our results are similar to Iwata et al. (2009) for France and
Menyah and Wolde-Rufael (2010) for the US. In contrast, renewable
energy did not contribute to reductions in emissions. This is also in line
with the finding of Menyah and Wolde-Rufael (2010) for the US. Whilst
it is beyond the scope of this paper to fully explore the possible causes for
the inability of renewable energy consumption to reduce CO2 emissions,
it is possible to suggest a number of factors that may have contributed to
this.6 In the first place, relative to nuclear energy, the share of renewable
energy consumption in total energy consumption has not increased
much in these countries. Even though it is known that significant
learning investments are required to ensure widespread use of renew-
6
In light of the positive relationship between renewable energy and emissions, a
referee suggested this result may be due to collinearity. Upon the recommendation of
the referee the following two models were estimated: (1) carbon emissions, nuclear
energy consumption, and growth and (2) carbon emissions, renewable energy
consumption, and growth to determine if the signs change significantly with respect to
the variables in question. In each case nuclear and renewable energy consumption,
respectively yielded a negative coefficient estimate in the long-run cointegrating
equation as well as in the short-run causality results in regard to emissions. Also, the
inclusion of fossil fuel consumption to the four-variable model did not alter the
positive coefficient on renewable energy consumption. The results are available upon
request.
Long-run
ΔR ΔY ECT
46.61 (0.127) 43.80 (0.192) − 0.258
[0.00]a [0.00]a [0.00]a [0.00]a [0.00]a
(− 0.129) 85.17 (0.217) − 0.562
[0.18] [0.19] [0.00]a [0.00]a [0.00]a
– 94.04 (0.347) − 0.336
[0.00]a [0.00]a [0.00]a
61.35 (0.183) – − 0.211
[0.00]a [0.00]a [0.00]a
ables (Sims, 2004), there was a substantial fall in R&D investment in
renewable energy in some developed countries (Nemant and Kammen,
2007) while for other countries, the development of the renewable
energy industry has not grown significantly due to the restricted size of
the home market for the technology or the industry is in its early stage of
development (Jäger-Waldau, 2007; Lewis and Wiser, 2007). At the same
time, in some countries, natural gas prices dropped dramatically,
making renewable energy less attractive when compared to natural
gas-fueled generation (Martinot et al., 2005). Furthermore, as the IEA
(2009a) argues, strong financial incentives are needed to support
renewable energy development, which have been inadequate in most
countries. Technology standards for renewable energy technologies and
fuels are also lacking with significant uncertainties about the rate at
which specific investment cost of renewables can be reduced (De Vries
et al., 2007). In addition, the current financial crisis has hit dispropor-
tionately hard the renewable energy sector leading to reductions in
investments (IEA, 2009a). It is also possible that most of these countries
may not have reached the threshold point where renewable energy
starts to mitigate CO2 emissions. According to Chiu and Chang (2009),
renewable energy supply has to account for 8.39% of total energy supply
before any impact on mitigating CO2 emissions is observed. Also, as
pointed out by Heal (2009) and Forsberg (2009), renewable energy may
not reduce emissions because the intermittent nature of its output and
the lack of adequate storage technology for renewable energy means
that for large peak electricity production, a back-up power source is
required which is usually provided by fossil fuel.
The short-run causality tests further show that there is bidirectional
causality between renewable energy consumption and economic growth.
This is in line with the findings of Apergis and Payne (2010b) for a panel of
20 OECD countries and in line with the long-run causality found by
Sadorsky (2009b) for a panel of 18 emerging economies. The presence of
bidirectional causality between renewable energy and economic growth
lends support for the feedback hypothesis whereby renewable energy
consumption and economic growth are interdependent. This interdepen-
dency suggests that energy policies aimed at increasing the production
and the consumption of renewable energy will have a positive impact on
economic growth. Moreover, the positive influence of the use of
renewable energy on economic growth further enhances the viability of
the renewable energy sector which provides additional support for the
assertion that renewable energy can serve as an important energy source
for these countries.
Table 3 also reveals there is bidirectional causality between CO2
emissions and economic growth. This is line with the findings of
Apergis and Payne (2009) for a panel of six Central American
countries and Apergis and Payne (2010a) for a panel of 11 countries
within the Commonwealth of Independent States. This interdepen-
dency of CO2 emissions and economic growth suggest that though
 N. Apergis et al. / Ecological Economics 69 (2010) 2255–2260
economic growth induces further emissions, efforts to reduce
emissions will have an adverse effect on economic growth as well.
Furthermore, Table 3 shows bidirectional causality between
nuclear energy consumption and economic growth. While economic
growth enhances nuclear energy consumption, an increase in nuclear
energy consumption contributes to a decrease in economic growth.
This finding may be attributed to perhaps the inefficient use of nuclear
energy associated with the relatively high capital costs and subse-
quent disposition of radioactive waste. In addition, the results indicate
unidirectional causality from nuclear energy consumption to renew-
able energy consumption. Specifically, an increase in nuclear energy
consumption decreases renewable energy consumption which sug-
gests that nuclear energy consumption may serve as a substitute for
renewable energy.7
The long-run dynamics displayed by the error correction terms
from Eqs. (2a)–(2d) reveal that emissions, nuclear energy consump-
tion, renewable energy consumption, and economic growth respond
to deviations from long-run equilibrium given the statistical signif-
icance of their respective error correction terms (ECT). In all cases, the
speed of adjustment to disequilibrium is moderately high ranging
from 21% to 56% per year which translates to an adjustment toward
equilibrium time horizon between 1.8 to 4.7 years.8 All the error
correction terms were statistically significant with the expected
negative sign which indicates there is a long-run Granger causality:
(a) from nuclear consumption, renewable energy consumption and
economic growth to CO2 emissions; (b) from CO2 emissions,
renewable energy consumption and economic growth to nuclear
energy consumption; (c) from CO2 emissions, nuclear energy
consumption and economic growth to renewable energy consump-
tion; and (d) from CO2 emissions, nuclear energy consumption and
renewable energy to economic growth.
4. Concluding Remarks
Energy security and climate change have become important
challenges facing many countries. These growing concerns have
brought the importance of both nuclear and renewable energy to the
forefront of the wider energy usage debate. Renewable and nuclear
energy can play an important role not only in energy security, but also
in reducing emissions. This paper is an attempt to explore the causal
relationship between CO2 emissions, nuclear energy consumption,
renewable energy consumption, and economic growth for a group of
19 developed and developing countries over the period 1984–2007
using a panel error correction modeling framework.
The empirical evidence indicates that there is a long-run
relationship between emissions, nuclear energy, renewable energy,
and economic growth. In the long-run nuclear energy reduces
emissions, with a 1% increase in nuclear energy consumption
associated with a 0.477% decrease in emissions. The causality results
also show that nuclear energy plays an important role in reducing CO2
emissions where nuclear energy consumption has a negative and
statistically significant impact on emissions. In contrast, renewable
energy did not contribute to reductions in emissions. Nevertheless,
there is bidirectional causality between renewable energy consump-
tion and economic growth suggesting that the expansion of
renewable energy not only can reduce the dependence of foreign
energy sources for import-dependent economies, but it can minimize
the risk associated with volatile oil and natural gas supplies and
prices.
7
More on the causal relationship between nuclear energy consumption and
economic growth, see Apergis and Payne (2010c)and Payne and Taylor (2010) and
citations therein.
8
Calculated as the inverse of the absolute value of the ECT.
2259
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