Exploring the nexus of industrial production and energy consumption on CO2 emissions in Bangladesh through ARDL bounds testing insights

Elevated CO2 emissions are a primary cause of the sustainability challenges, including rising sea levels and extreme weather patterns, faced by Bangladesh and the world. This study examines the intricate relationship between CO2 emissions and various economic and industrial factors in Bangladesh, using the autoregressive distributed lag (ARDL) bound test. By analyzing data from 1971 to 2020, the research identifies both short-run and long-run dynamics influencing CO2 emissions. The findings reveal that industrial production and non-renewable energy consumption have a significant positive impact on CO2 emissions, while agricultural activities and fertilizer consumption exhibit a negative effect.The study underscores the need for Bangladesh to transition towards renewable energy sources and improve agricultural practices to mitigate CO2 emissions. Advanced econometric techniques, including the ARDL Bound Test, CUSUM, and CUSUMSQ, are employed to ensure the robustness of the results. The ARDL framework yields key metrics: RMSE = 0.034, MSE = 0.001, AIC = -160.002, BIC = -139.651, R-squared = 0.801, and adjusted R-squared = 0.753, to explore the CO2 emissions nexus in Bangladesh.The study concludes that, while industrial and energy factors significantly contribute to CO2 emissions, enhancing renewable energy use and adopting climate-smart agricultural practices are essential for sustainable environmental management. Policy recommendations include promoting renewable energy adoption, implementing carbon capture technologies, and revising carbon tax policies to achieve long-term sustainability and environmental conservation.