Causation between energy consumption and climate change in the countries with the highest global climate risk

Abstract

The study aims to examine if there is causation between "energy consumption" and "climate change" through the data of ten countries with the highest Climate Risk Index (CRI) scores. The ten highest CRI score countries include Puerto Rico, Myanmar, Haiti, Philippines, Mozambique, The Bahamas, Bangladesh, Pakistan, Thailand, and Nepal. The annual data for the years 2005-2019 was used because of the data constraints. CRI is selected as the dependent variable. As for the independent variables, the ratios of the energy consumption of the key sectors indicated by the International Energy Agency (IEA) to the total energy consumption are chosen. These key sectors in energy consumption are industry (IND), transportation (TRA), trade and public services (TPS), and housing (HOU). Economic growth (EG), which is one of the main factors affecting climate change in the literature, is included in the model as the control variable. According to the results of the Dumitrescu-Hurlin causality test, there is one-way causality from transportation towards CRI, but not any causality between others. It is evaluated that since the transportation sector is heavily dependent on fossil fuels, it has a strong effect on the amount of CO2 emissions and a significant determining role on climate change.