The environmental Kuznets curve hypothesis for Bangladesh: the importance of natural gas, liquefied petroleum gas, and hydropower consumption

Abstract

Mitigating environmental pollution has become a global agenda keeping the sustainability of socioeconomic and environmental development into cognizance. Against this backdrop, this paper aims to evaluate the authenticity of the environmental Kuznets curve hypothesis in the context of Bangladesh; particularly controlling for different types of energy consumption including coal, natural gas, liquefied petroleum gas, refined petroleum oil, and hydropower. The results from the robust econometric analysis, accounting for multiple structural break concerns in the data, authenticate the validity of the environmental Kuznets curve hypothesis. Besides, the predicted economic growth thresholds are found to be higher than the current level which indicates that Bangladesh is still at a development phase where the nation is trading-off environmental deterioration for economic expansion. Moreover, the results also show that consumption of coal and refined petroleum oils increase emissions of carbon dioxide and aggregate greenhouse gases while higher consumption of natural gas, liquefied petroleum gas, and hydropower are seen to abate these emissions. Thus, in line with these findings, it can be asserted that both natural gas and liquefied petroleum gas can function as transitionary fuels to mitigate environmental pollution in Bangladesh before the nation can completely undergo renewable energy transition. Hence, these findings impose key policy takeaways concerning energy diversification and environmental sustainability in Bangladesh.

Keywords: Carbon dioxide; Coal; EKC hypothesis; Hydropower; Liquefied petroleum gas; Natural gas.