The relationship between energy consumption and carbon emissions

In this thesis study, the long-term relationship between the amount of energy consumed per unit of GDP (energy intensity) and the amount of CO2 emission per unit of GDP (carbon intensity) was investigated in the framework of two-step Engle-Granger co-integration test and Error Correction Model by using annual data set of 1985-2015 period for Turkey. The analysis results of Engle-Granger co-integration showed that there is a long-term and positive relationship between energy intensity and carbon intensity variables. Also, unidirectional Granger causality from energy consumption to carbon emission was determined according to the error correction model analysis. Hereunder, while the energy intensity is reduced, the carbon intensity decreases. When per unit of GDP production is carried out with the less energy consumption, the less CO2 is released at the same economic growth level. Factors such as the use of more environment-friendly technologies in production processes or the shift of the main production activity from the manufacturing sector to the services sector, reduce the amount of energy needed for production. In other words, economic growth by using less energy consumption means less CO2 emissions.