Energy efficiency and underlying carbon emission trends

The present study aims to quantify the impact of energy efficiency on environmental quality in the top five greenhouse gas–emitting countries, namely, China, USA, India, Germany, and Japan. Based on annual data set from 1971 to 2016, the study explores the role of technological innovations to protect environmental quality by reducing CO2 emissions of these countries by employing structural time series model (STSM) approach. The results show that CO2 emissions in China, India, the USA, and Germany are growing faster than energy consumption, while in Japan the former is growing more slowly than energy consumption. The estimated carbon emission trends are upward sloping for China and India and downward sloping for Germany. However, for the USA and Japan, the underlying trend in carbon emission shows mix results. The persistently increasing slope of the carbon emission trends in China and India suggest that either energy-efficient appliances have not been used to protect the quality of the environment or any improvement in energy efficiency due to technological progress is offset by other exogenous factors.