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Energy Prices and Turning Points: The Relationship between Income and Energy Use/Carbon Emissions

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  • Amy K. Richmond
  • Robert K. Kaufmann

Abstract

Models used to test whether an environmental Kuznets curve (EKC) can be used to describe the relationship between GDP and energy use and/or carbon emissions may be biased by the omission of energy prices. Here we include real energy prices and fuel shares in models that describe energy use and carbon emissions. We test if these models show a turning point in OECD countries. Results indicate that including energy prices eliminates statistical support for a turning point and suggest that the relationship between income and both energy use and carbon emissions is represented most accurately by diminishing returns. These results imply that economic growth per se will not reduce energy use or emissions that cause global climate change.

Suggested Citation

  • Amy K. Richmond & Robert K. Kaufmann, 2006. "Energy Prices and Turning Points: The Relationship between Income and Energy Use/Carbon Emissions," The Energy Journal, , vol. 27(4), pages 157-180, October.
    • Handle: RePEc:sae:enejou:v:27:y:2006:i:4:p:157-180
    DOI: 10.5547/ISSN0195-6574-EJ-Vol27-No4-7
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    1. de Bruyn, S. M. & van den Bergh, J. C. J. M. & Opschoor, J. B., 1998. "Economic growth and emissions: reconsidering the empirical basis of environmental Kuznets curves," Ecological Economics, Elsevier, vol. 25(2), pages 161-175, May.
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    3. Galeotti, Marzio & Lanza, Alessandro, 1999. "Richer and cleaner? A study on carbon dioxide emissions in developing countries," Energy Policy, Elsevier, vol. 27(10), pages 565-573, October.
    4. Roger Perman & David I. Stern, 2003. "Evidence from panel unit root and cointegration tests that the Environmental Kuznets Curve does not exist," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 47(3), pages 325-347, September.
    5. Kaufmann, Robert K., 1992. "A biophysical analysis of the energy/real GDP ratio: implications for substitution and technical change," Ecological Economics, Elsevier, vol. 6(1), pages 35-56, July.
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    More about this item

    Keywords

    Climate change; CO2 emissions; energy prices; kuznets curve; environmental policy; panel data;
    All these keywords.

    JEL classification:

    • F0 - International Economics - - General

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