Abstract:
This thesis examines the interdependence between economic growth (GDP), energy consumption (EC), and carbon dioxide (CO₂) emissions in New Zealand from 1972 to 2017. Specifically, answers are sought to the following related questions: (1) What are the relationships between GDP, EC, and CO₂ emissions in New Zealand? (2) Does the relationship between GDP per capita and the CO₂ emissions per capita in New Zealand follow the Environmental Kuznets Curve (EKC) hypothesis? (3) What are the possible explanations for the observed relationships? (4) What are the possible implications for economic growth, environmental and energy policies? The analysis is conducted in a multivariate production model (which includes capital and labour as additional variables) and a EKC model, using the Autoregressive Distributed Lag Bounds test approach, the Toda and Yamamoto procedure and the Generalised Impulse Response Function. This thesis aims to provide policymakers with food for thought (points to consider) when developing environmental, energy and economic growth policies. There are four mains findings from this thesis. First, there is positive unidirectional relationship from EC to CO₂ emissions in the short and long run, emphasising that greater EC has led to higher CO₂ emissions in New Zealand. Though this result may not be novel, it is critical as it emphasises the importance of decarbonising New Zealand’s energy sector. Second, there is negative unidirectional relationship from GDP to CO₂ emissions in the short and long run indicating that increase in GDP has decreased CO₂ emissions over the sample period. Third, there is a positive bidirectional relationship between GDP and EC in the short run. Fourth, an inverted U-shaped relationship is confirmed between GDP and CO₂ emissions for the sample period, supporting the EKC hypothesis. Overall, this thesis's findings suggest that a holistic and coordinated policy approach is required to transition New Zealand to a low-emissions economy.
