Electrical Energy Dilemma and CO2 Emission in Pakistan: Decomposing the Positive and Negative Shocks by Using an Asymmetric Technique

The key aim of the current analysis was to examine the impact of electricity production from various sources (oil, nuclear, natural gas and coal) on CO2 emission in Pakistan by utilizing the annual data series varies from 1975–2020. The study employed the two unit root tests for the purpose of stationarity, while an asymmetric Nonlinear Autoregressive Distributed Lag (NARDL) technique was applied to expose the influence of electrical energy on CO2 emission via long-run and short-run dynamics. Findings show that via long-run and short-run the variable electricity production from oil and coal sources has a positive impact on CO2 emission in Pakistan via positive and negative shocks. Electricity production from nuclear sources exposed the adverse impact on CO2 emissions. Similarly, electricity production from natural gas demonstrates the positive and adversative linkage with CO2 emission through positive and negative shocks. There is no doubt that Pakistan is still dealing with an electricity deficit because of poor energy generation in the country, but this has contributed to an increase in CO2 emissions. To avoid additional environmental damage, the government should pursue new and major CO2 emission reduction measures.