On the Causality between Electricity Generation, Energy Consumption, Investment Patterns and CO2 Emissions in India

This paper is an attempt to examine the causality relationships of carbon dioxide (CO
₂
) emissions with energy consumption (EC) and investment patterns {both domestic (DI) and foreign (FDI)} in India along with electricity production from two main sources i.e. coal (C) and renewable (R) sources. The dynamic multivariate Modified Wald (MWALD) test proposed by Toda and Yamamoto is used for the purpose. Results indicate unidirectional causalities from both CO
₂
and C to EC. Unidirectional causalities are also found from FDI to both CO
₂
and EC; confirming the existence of Pollution Haven Hypothesis (PHH) in India. The unidirectional causality from C to DI and no causality from/to R to/from any other variable indicate that C is the dominant source for electricity production in domestic investments in India as compared to R.