The regulated coal sector and CO2 emissions in Indian growth process: Empirical evidence over half a century and policy suggestions

Despite the recent changing trend in the energy-mix, coal remains the primary source of energy in India. The coal sector in India is one of the most regulated sectors in the world. Considering both sides of the market, we establish the presence of long-run dynamics among economic growth and carbon-dioxide (CO2) emissions over half a century. Our innovation in this study is to introduce coal rent, a proxy for regulated coal sector in India in explaining CO2 emissions and the growth process. We find coal rent influences CO2 emissions with a feedback effect. Both trade openness and financial development are established to be significant in influencing growth process with a feedback effect. Using the longest available time series data, the study fills the major gap in the literature by incorporating the competitive process of this sector in the demand-supply framework and establish the need for investment in advanced coal technologies and alternative energy sources in breaking regulatory barriers. In this respect, we establish a significant role of trade openness and financial development in maintaining economic growth and implementing carbon abatement policies in future.