Assessing the interdependence among renewable and non-renewable energies, economic growth, and CO2 emissions in Mexico

This paper is aimed at examining the short- and long-run relationships among consumption of renewable and non-renewable energies, economic growth, and CO2 emissions in Mexico during the period 1973–2018. Data were obtained from the World Bank and the British Oil Company BP. A cointegration model together with a fully modified ordinary least squares (FMOLS) is used to estimate possible associations among all variables. Subsequently, the Granger causality test is applied to empirically verify the environmental Kuznets curve (EKC) hypothesis. The main empirical results are that the variables under study explain CO2 emissions in the short and long run, with economic growth having the greatest influence on CO2 emissions, which provides empirical evidence of an EKC for Mexico. Moreover, consumption of renewable and non-renewable energies and economic growth causes in the Granger sense the current levels of CO2 emissions. Moreover, lagged GDP and lagged non-renewable energy consumption do influence (Granger cause) current CO2 emissions. Long-term policies should encourage the use of renewable energies in the electricity, transport, manufacture, and construction sectors.