The Kyoto Protocol and CO₂ emission: is India still hibernating?

The purpose of this study is to investigate the relationship between CO₂ emission and its core determinants, namely, economic growth, energy consumption and trade openness in the pre- and post-Kyoto Protocol era in the Indian economy.

The study uses the ARDL bounds test to analyze the long-run and short-run empirical relationship between the interested variables for the time period 1971-2013. A dummy variable representing the Kyoto Protocol regime has been included to examine the likely impact of international climate policies (Kyoto Protocol) in controlling and reducing CO₂ emission in India.

The empirical results indicate the possibility of increase in CO₂ emission from India even after the Kyoto Protocol regime. Evidence of inverted U-shaped relationship between CO₂ emission and economic growth (EKC hypothesis) has been confirmed. However, compared to increase in CO₂ emission, the magnitude of decrease due to improvement in economic growth is relatively lesser. Energy consumption and trade openness are also found to increase CO₂ emission.

The results indicate that there is a lack of commitment on the part of India to curtail CO₂ emission, which can be disastrous for future prosperity. Financing the renewable electricity generation, R&D subsidy and tax-free renewable energy seems to be imperative to address this catastrophic problem.

This study is the first attempt to analyze the impact of international climate policy (Kyoto Protocol) on CO₂ emission by incorporating a fixed dummy in the ARDL specifications.