Environmental pollution has increasingly become an issue of global concern because of climate
change and consciousness for environmental sustainability. To this end, this paper
investigates the relationship between energy consumption, carbon dioxide (CO2) emissions
and economic growth of the G8 countries over the period of 56 years spanning 1960 through
2015 using both the Fully Modified and Dynamic OLS estimation techniques. The empirical
investigation establishes the critical roles played by energy consumption and CO2 emissions
on economic growth but in substantially opposite directions. While that of the former positively
enhances economic growth, on the one hand, the latter negatively deters it. In addition,
a long-run relationship is equally established but with the varied direction of causality.
Finally, the study offers significant policy implications directed at using energy resource
efficiently as well as curtailing environmental contaminants.