The environmental degradation increase during recent years, has proposed the investigation of economic activities and environmental indicators relation. Mostly a unidirectional causality from economic activities to pollution is assumed. While the direction of causality between pollution and economic growth has specific policy implications, presumption of this direction may influence the nature of the relationship. Therefore, the examination of economic dimensions of pollutant emissions and its consequents has significant importance. This study examines the long-run relationship between emissions and economic growth considering fossil fuel consumption and openness variables in Iran during 1961-2006. Using causality test based on error correction mechanism shows that there exists causality from economic growth, energy consumption and openness to carbon emission, but it is not hold vice versa. On one hand fossil fuel consumptions has no effect on the economic growth and on the other it is the cause of pollutant emissions. So as a policy implication, fossil fuel conservation can be as a way to reduce pollutions.
JEL Classification: O13, Q53