Reinvigorating the role of clean energy transition for achieving a low-carbon economy: evidence from Bangladesh

Achieving carbon-neutrality has become a global agenda following the ratification of the Paris Agreement. For the developing countries, in particular, attaining a low-carbon economy is particularly important since these economies are predominantly fossil-fuel dependent, to which Bangladesh is no exception. Therefore, this study specifically aimed at evaluating the environmental impacts associated with energy consumption and other key macroeconomic variables in the context of Bangladesh over the 1975-2016 period. As opposed to the conventional practice of using carbon dioxide emissions to proxy environmental quality, this study makes a novel attempt to use the carbon footprints to measure environmental welfare in Bangldesh. The outcomes from this study are expected to facilitate the carbon-neutrality objective of Bangladesh and, therefore, enable the nation to comply with its commitments concerning the attainment of the targets enlisted under the Paris Agreement and the United Nations Sustainable Development Goals declarations. The econometric analysis involved the application of methods that are suitable for handling the structural break issues in the data. The overall findings from empirical exercises reveal that aggregate energy consumption, fossil fuel consumption, and natural gas consumption boost the carbon footprint figures of Bangladesh. In contrast, nonfossil fuel consumption and hydroelectricity consumption are witnessed to abate the carbon footprint levels. Besides, economic growth and international trade are also evidenced to further increase the carbon footprints. Hence, these findings suggest that a clean energy transition within the Bangladesh economy can be the panacea to the nation's persitently aggravating environmental hardships. Furthermore, the causality analysis confirmed the presence of unidirectional causalities stemming from total energy consumption, fossil fuel consumption, natural gas consumption, hydroelectricity consumption, economic growth, and international trade to the carbon footprints. On the other hand, nonfossil fuel consumption is found to be bidirectionally associated with carbon footprints. In line with these aforementioned findings, several key policy suggestions are put forward regarding the facilitation of the carbon-neutrality agenda in Bangladesh.