Economic growth, CO2 emissions, and fossil fuels consumption in Iran

Environmental issues have attracted renewed interest and more attention during recent years due to climatic problems associated with the increased levels of pollution and the deterioration of the environmental quality as a result of increased human activity. This paper investigates the causal relationships between economic growth, carbon emission, and fossil fuels consumption, using the relatively new time series technique known as the Toda-Yamamoto method for Iran during the period 1967-2007. Total fossil fuels, petroleum products, and natural gas consumption are used as three proxies for energy consumption. Empirical results suggest a unidirectional Granger causality running from GDP and two proxies of energy consumption (petroleum products and natural gas consumption) to carbon emissions, and no Granger causality running from total fossil fuels consumption to carbon emissions in the long run. The results also show that carbon emissions, petroleum products, and total fossil fuels consumption do not lead to economic growth, though gas consumption does.