On examining the relationship of energy consumption with economic growth and carbon emission, we provide the evidence that the petroleum consumption growth significantly contributes to GSDP growth of Kerala (as indicated from regression coefficient of 0.70%), whereas electricity consumption growth affects GSDP growth with a time lag (as evidenced from Granger causality and regression coefficient of .13%). In contrast, GSDP growth of the state drives up both electricity and petroleum consumption demand, along with an observed strong elasticity of substitution relationship between consumption of two energy components (coefficients varying from 30% to 66%). We further find that the growth of transportation sector activities measured from transportation output which significantly contributes to gross emissions (as reflected from regression coefficient of .32%) rather than the overall GSDP growth of the state, suggesting that the demand for petroleum product increases with increased income growth without regard for its environmental concerns over the long-run. This is occurring more especially when amounts of CO₂ emission are very much lesser in the state as compared to the national average of all the states in India.