The Nexus between GHGs Emissions and Clean Growth: Empirical Evidence from Canadian Provinces

Canada is one of the most emission-intensive economies in the world and the big challenge for Canada and its provinces is in how to mitigate the GHGs while keeping the same pace of economic growth. This paper's main objective is to examine the relationship between greenhouse gas (GHGs) emissions and clean growth using cross-sectional data for Canadian provinces from 1995 to 2019. Based on the results of the cross-sectional dependence, slope heterogeneity, and Hausman test, the study applied the pooled mean group (PMG) estimators. For the robustness of the results, the study also provided the results of augmented mean group (AMG) estimators. The results of Westerlund's test show that the variables of the estimated models are cointegrated in the long run except in the case of the carbon intensity (GHGs/Energy) model, while no short-run relationship was observed. The main findings of both estimators show that an inverted U-shaped relationship exists in the case of the carbon intensity model. In contrast, as expected, a U-shaped relationship exists in the case of the energy intensity model. The results also confirmed that Canada reduced its GHGs emissions after 2005 and that GHGs emissions and energy intensity are decreasing over time. At the province level, only Alberta has no long-run relationship as regards carbon intensity and energy intensity, while Nova Scotia and British Colombia have no long-run relationship as regards energy intensity. In terms of tipping points, Canada is in the increasing phase of the inverted U-shaped curve in the case of carbon intensity, while in the decreasing phase of the U-shaped curve in the case of energy intensity. There is a significant decrease in greenhouse gas emissions per capita at the provincial level compared to the 2005 base levels. It is imperative to reduce greenhouse gas emissions per capita in Canada and its provinces over time by gradually rolling out energy-saving incentives rather than by using more efficient energy-saving technology. The government of Canada should shift towards low-carbon energy and renewable sources which emit fewer greenhouse gases per unit of energy produced.