CAUSALITY AND CO-INTEGRATION ANALYSIS OF ENERGY CONSUMPTION, ECONOMIC GROWTH AND CO2 EMISSION IN MADAGASCAR

Abstract

This Master thesis deals with the causality and cointegration relationship between energy consumption, economic growth, CO2 emissions, energy intensity and index of dirty in the industry, transport and residential sector of Madagascar. Energy consumption is a lever for development and no economy in the world can function without energy. The increase in economic growth must be accompanied by an increase in energy consumption. However, this increase in energy consumption could harm the environment because CO2 emissions could increase. According to an analysis of the inverse Kuznets environmental U-curve, it is found that as Madagascar's GDP per capita increases, CO2 emissions per capita will decrease when they reach the optimal point. Therefore, it is good for the Malagasy economy to increase this energy consumption because the level of production that will be done by the weak sectors is still very low. Compared to the volume of CO2 emissions that Madagascar should emit by 2030 as envisaged by the COP21, it should be possible to achieve this. Of course, this emission is higher according to KAYA's forecast, so it should decrease as the GDP per capita will increase (seteris paribis). At the moment, the cost of energy from renewable sources is still very high compared to non-renewable energy even though the world is currently in the process of energy transformation. In addition, the subsidy to be provided by the state for the green energy production technology is still very low. For this reason, it is necessary to increase the Malagasy purchasing power to be able to use the green energy in order to stimulate the green growth.