CHAPTER 1

INTRODUCTION

1.0 Background of the Study

Over the past two decades, the issue of climate change due to increased global warming has been a major environmental challenge. Rising levels of carbon dioxide emissions is considered one of the principal causes of global warming and climatic instability. In order to investigate the climate change concern, this research examines the cointegration and causal relationship between economic growths and carbon dioxide (CO2) emissions in selected five Association of Southeast Asian Nations (ASEAN) countries for the period 1980 to 2010 namely Indonesia, Malaysia, Philippines, Singapore and Thailand. The research focus on the relationship of these two variables, from the increasing effects of energy on economic development.

This research aims to discover the linkage of these two variables as emissions and economic growth are related in contributing the global warming or climate change. This issues has been discussed frequently and become a bigger concern globally. The Research specifically focus on ASEAN five, and not to all ASEAN countries as these five countries sharing the similarity in the level of economics development since 1980 that coincided with significant increase in fossil fuel usage. The pressure exists for ASEAN five to achieve a balanced level of energy that control the CO2 emissions to the environment but at the same time ensuring the country’s sustainable economic growth. Thus, the issue regarding how increased fossil fuel consumption and economic growth influence carbon dioxide emissions is currently one of the most interesting topic.