This paper aims to explore the empirical result of the Granger causality relationship between GDP, energy consumption and CO2 emissions evidence from Hong Kong and Singapore covered period from 1965 to 2010. This study is to examine how economic growth in small, populated and advanced economies influences the energy consumption and CO2 emissions in order to find the proper policy to cope with global warming issue. The Granger causality results performing by VECM model indicate that there is a unidirectional causality running from CO2 emissions to energy consumption and CO2 emissions to GDP in Hong Kong. Moreover, there is bidirectional causality between GDP and energy consumption existing. The evidences from Singapore confirm that there is a unidirectional causality running from CO2 emissions to GDP and from CO2 emissions to energy consumption. Besides, the results also indicated bidirectional causality between energy consumption and CO2 emissions. The findings suggest government to focusing on energy efficiency and renewable energy by promote public transportation, low carbon emissions car, impose tax on all fuel related activities and increase environmental friendly products and invest renewable energy infrastructure.
