Trade-Off Between CO2 Emissions and Income: Is There any Evidence of an Environmental Kuznets Curve in Australia?

Abstract This paper examines the trade-off between per-capita CO2 emissions and per-capita GDP in Australia using data for the last five decades. It has estimated the national CO2 emissions from energy sources for 1961–2012, based on the consumption of disaggregated energy categories. This study applies recent advances of econometric techniques and complements the conventional co-integration tests with the non-linear approach. The subsequent error correction model is formulated using an ARDL approach based on alternative lag section criteria. The empirical evidence presented in the paper indicates the existence of an inverted U-shape relationship between per-capita CO2 emissions and per-capita GDP in Australia. Related policy implications are discussed. JEL Classifications: Q5; O4; C22