RESEARCH ARTICLE Analyzing asymmetric impact of economic growth, energy use, FDI inflows, and oil prices on CO 2 emissions through NARDL approach Aqib Mujtaba 1 & Pabitra Kumar Jena 1 Received: 13 October 2020 /Accepted: 20 January 2021 # The Author(s), under exclusive licence to Springer-Verlag GmbH, DE part of Springer Nature 2021 Abstract Even though numerous studies explore the impact of macroeconomic variables on carbon dioxide (CO 2 ) emissions, only a few existing studies estimate the asymmetric impact and causality. By considering the significance of asymmetries, this study investigates the asymmetric impact of economic growth, energy use, and foreign direct investment inflows on CO 2 emissions in India wherein oil prices are included as additional variable. The kinked exponential growth of these variables over the period 1986–2014 is also estimated. To this end, nonlinear autoregressive distributed lag (NARDL) model and asymmetric causality test are used. The results show that increase in economic growth would decrease CO 2 emissions, while a reduction in economic growth would increase CO 2 emissions which implies an inverted U-shaped link between economic growth and CO 2 emissions. The positive and negative shocks in oil prices have a favorable and significant impact on CO 2 emissions as well. Furthermore, the energy consumption with positive shock shows a positive and significant impact on CO 2 emission. Besides, the findings of foreign direct investment inflows support the pollution heaven hypothesis. In light of these results, this study also suggested some policy implications and future research avenues in the concluding section. Keywords CO 2 emissions . Economic growth . Oil prices . Asymmetries . NARDL JEL classification C50 . Q56 Introduction India is an active player at international fora in the fight against climate change and a leader in Mission Innovation and other multilateral collaboration including the International Energy Agency Technology Collaboration Programs. Being an active player and a leader at international conventions, India has shown a marked increase in clean en- ergy research development and deployment (RD&D) funding. India is one of the most rapidly growing economy among the south Asian emerging economies with (6.6%) average annual GDP growth from 2011 to 2014. Due to increasing energy consumption created by this growth, there may be unpredictable effects on energy resources and environment. Although the government of India has progressively strength- ened rules to combat air pollution and adopted the National Clean Air Programme (NCAP), the real progress on the ground has so far been limited. According to a report of International Energy Agency (2019), the per capita emissions of India is (1.9 tons) and contributed (7%) to the global CO 2 emissions. In an agreement intended by United Nations for cli- mate change, India assured to reduce its emissions by installing (40%) of its energy from renewable resources compared to 2005 level by 2030. However, according to the report of IEA ( 2019), India has increased its renewable energy installations which is (10%) higher than the previous year, but the energy intensity has declined (3%) comparatively. Contrary, according to a report of IEA (2020), the government of India subsidized the coal mining industries at 2.4$ billion in 2017. Furthermore, the transformation from living economy- based on human capital and animal power to a nonliving economy-based on energy consuming machineries forced to live in the polluted and toxic atmosphere (Mujtaba et al. 2020). The energy sector is a major contributor to industrial Responsible Editor: Roula Inglesi-Lotz * Aqib Mujtaba aqibmazad@gmail.com 1 School of Economics, Shri Mata Vaishno Devi University, Katra, Jammu and Kashmir 182320, India Environmental Science and Pollution Research https://doi.org/10.1007/s11356-021-12660-z Content courtesy of Springer Nature, terms of use apply. Rights reserved.