Energy Markets and Environmental Sustainability: The Case of Three Emerging Economies

The quest of ensuring that the standard of living for individuals in the society through improvement in the production process, consumption of goods and services, determination of market prices to allow easy and equitable access to finished goods come with consequences (or tradeoff with) on a sustainable environment. This has led to an extensive discourse on energy-growth-environment nexus. This thesis will take three dimensions as its structure. The first dimension of this thesis reaffirms that the critical role of energy in the industrial life of an economy. Theoretical and empirical evidence reveals that energy prices play an important role in affecting the economy’s productivity. Hence, we investigate the short-run and long-run effect of energy prices and total taxes of the variables of interest on energy consumption in Turkey. The ARDL technique was employed to analyze the short-run and long-run relationship between the variables of interest for the period 2000-2018 using quarterly data. The empirical results reveal that an increase in the tax of heavy fuel oil for electricity generation by one percent will lead to 0.0221% and 0.2540% increase in energy consumption in kg oil equivalent per capita in the short-run and long-run at 5% and 1% significance level respectively. A one percent increase in the PHFt will lead to a 0.0202% and 0.2104% increase in the long-run energy consumed at 5% and 1% level of significance in the short-run. Our findings suggest critical policy direction for the government, and stakeholders to have market-determined energy prices rather than government subsidizing consumption, and appropriate tax policy to ensure fiscal discipline and stability. The second focus primarily is to empirically investigate the natural gas consumption-economic growth nexus in Iran, while incorporating real gross fixed capital formation (GFCF) and the role of oil revenue (OR) as additional variables to make it a multivariate framework to avoid possible omission variable bias in the estimations. The quarterly frequency data from 1990Q1 to 2017Q4 is used. The empirical results suggest that natural gas consumption exerts a significant positive impact on economic output in Iran, and also that there is a one-way causality from natural gas consumption to economic output. This study corroborates the natural gas led growth hypothesis; being natural gas consumption a suitable alternative, as a complementary green energy source (IGU, 2015). There is a need for energy portfolio diversification in Iran to attain full gains from the energy sector, reducing other energies’ emissions. The findings provide policymakers useful insight into the state of the energy sector in Iran. Finally, modeling the dynamic nexus among coal consumption, pollutant emissions and real income with empirical evidence from South Africa were considered in this dissertation. This study explores the interaction among coal consumption, pollutant emissions and real income for South Africa in a multivariate setting. The annual frequency data spanning from 1965 to 2017 is used for analysis. Empirical evidence supports the validity of the inverted U-shaped pattern between energy consumption and environmental degradation in South Africa. The Toda-Yamamoto Granger causality test shows a feedback causality between economic growth and carbon dioxide emissions, as well as between GDP and coal consumption. Based on these outcomes, policy directions such as diversification of the South Africa energy mix to renewables and cleaner energy sources and also the adoption of carbon capturing and storage techniques were suggested to engender a cleaner and friendlier environment.