Daniel Kwabena Twerefou, Frank Adusah-Poku and William Bekoe
The Environmental Kuznets Curve (EKC) hypothesis postulates an inverted U-shaped relationship between different pollutants and economic growth. In Ghana, as in many other developing countries, there exist scanty studies that confirm or otherwise the EKC hypothesis with regards to CO2 emissions as well as the factors that drive CO2 emissions. This work aims to bridge this knowledge gap by addressing these two major questions using data from 1970 to 2010 and the Auto Regressive Distributed Lag (ARDL) Bounds Testing approach. The results rather suggest a U-shaped relationship between per capita GDP and CO2 emissions per capita indicating the non-existence of the EKC hypothesis for CO2 in Ghana. This implies that further increase in per capita Gross Domestic Product (GDP) will only be associated with increase in CO2 emissions as the income per capita turning point of about $624 at constant 2000 prices occurred between 1996 and 1997. Furthermore, our results reveal energy consumption and trade openness are positive long run drivers of CO2 emissions. It is therefore recommended that the enhancement of trade liberalization policies should ensure the use of cleaner technologies and products while investment in cleaner energy alternatives could help reduce CO2 emissions. We also recommend the implementation of the Low Carbon Development Strategy which integrates development and climate change mitigation actions.