Renewable energy and foreign direct investment: does the governance matter for CO2 emissions? Application of CS-ARDL

The impact of regional policy implementation on the decoupling of carbon emissions and economic development

The contradiction between economic growth demands and the achievement of the "dual-carbon" goals at the regional level is a pressing issue in China. As a significant economic and cultural center in the western region of China, the Guanzhong Plain urban agglomeration has experienced rapid development and urbanization, making it one of the key areas for national development. Therefore, greater attention should be given to carbon emission reduction in this region. This study focuses on the dataset from 2010 to 2019 in the Guanzhong Plain urban agglomeration, utilizing an input-output table to construct a carbon dioxide emission inventory. The research investigates the impact of regional classification on carbon emission levels within the Guanzhong Plain urban agglomeration. Furthermore, the Tapio decoupling analysis method is employed to assess the decoupling coefficient between regional economic development and carbon emissions. Additionally, the Theil index inequality analysis method is utilized to measure the disparities in per capita carbon emissions among cities within the region. Research findings indicate the following: 1) The regional classification of the Guanzhong Plain urban agglomeration is an effective policy for reducing regional carbon emissions and promoting carbon emissions reduction. 2) There exist variations in energy and industrial structures among cities within the urban agglomeration, necessitating tailored measures for low-carbon transition based on the specific circumstances of each city. 3) The regional classification of the urban agglomeration significantly influences the degree of decoupling between economic development and carbon emissions, with a trend towards stronger decoupling. The study suggests that cities within the Guanzhong Plain urban agglomeration should adopt measures aligned with their natural conditions and economic characteristics to achieve a low-carbon transition. Leveraging the regional cooperation capacity of the urban agglomeration is crucial to decouple economic development from carbon emissions, thereby promoting sustainable economic growth and environmental protection in a mutually beneficial manner.

The era of global warming mitigation: The role of financial inclusion, globalization and governance institutions

Several efforts have been undertaken by environmentalists, nations, and various international organizations towards the fight against carbon emissions. The continuity of the environment has been one of the main concerns of the international system and state and non-state actors and government institutions are encouraged to play their roles effectively. Therefore, the study assesses the effect of financial inclusion, globalization, and government institutions on carbon emissions. The study used data from 1996 to 2021 and employed FMOLS model for the analysis. The findings of the study confirm the pollution halo hypothesis implying globalization promotes environmental sustainability. However, financial inclusion and government institutions have no significant effect on global warming mitigation. Nevertheless, institutional governance encourages global warming while political stability promotes the fight against global warming, the effect of economic governance is not significant. Renewable energy and economic growth exhibit positive and negative effect, respectively, on environmental sustainability. The findings suggest the encouragement of the rule of law, political stability, and an effective low carbon trading system as part of the policy implications.

From crisis to resilience: strengthening climate action in OECD countries through environmental policy and energy transition

Climate change represents a grave challenge to the global economy, environment, and societal well-being, jeopardizing their long-term sustainability. In response to this urgent issue, the study emphasizes the significance of environmental policy and energy transitions as fundamental factors in addressing the climate change crisis. The research draws upon data from OECD countries spanning the period between 1990 and 2020, utilizing robust econometric techniques to assess data properties. The study utilizes a comprehensive CS-ARDL model, incorporating multiple control variables like non-renewable energy GDP, foreign direct investment (FDI), and research and development (R&D). The results show that environmental policy and energy transitions are effective in reducing climate change impacts in the form of CO2 emissions. The non-environmental factors like GDP and FDI are positively associated and thereby accelerate climate change processes, whereas R&D promotes environmental protection by reducing CO2 emissions. Based on these findings, the study advocates for the implementation of rigorous policy measures by OECD economies to strengthen and enforce environmental policies to ensure compliance and foster sustainable practices across sectors. The study also suggests that OECD must promote energy transitions by investing in renewable energy sources at the mass level (micro and macro) and phasing out reliance on non-renewable energy.

Reinvigorating the environmental Kuznets curve hypothesis in the context of highly polluted nations: evidence using advanced panel estimation techniques

China, United States, India, Russia, and Japan are regarded as the top five carbon dioxide-emitting nations in the world. These countries altogether account for more than half of the global annual discharges of carbon dioxide. Consequently, impeding the carbon emission-led environmental adversities in these countries is of critical emphasis for establishing environmental sustainability worldwide. In this regard, this study checks how economic progress, energy use intensification, and renewable energy use affect the annual growth rates of per capita carbon dioxide emission in these highly-polluted economies considering the study period from 1990 to 2021. Besides, for analytical purposes, advanced panel data estimation techniques have been utilized for detecting and neutralizing the impacts of cross-sectional dependency and slope heterogeneity-related problems in the data. Overall, the findings endorse that economic progress deteriorates environmental quality both in the short and long run. However, since the long-run unfavorable environmental impacts of economic growth are relatively lower compared with the short-run impacts, the environmental Kuznets curve hypothesis can be deemed valid. Besides, more intensive use of energy resources is witnessed to impose negative long-run environmental consequences while the adoption of renewable energy instead of fossil fuels is found to improve environmental well-being, both in the short and long run. Furthermore, the results affirm that economic progress and energy use intensification jointly degrade environmental conditions. By contrast, economic progress alongside greater adoption of renewable energy is observed to inflict an environmental quality-improving effect. Considering these findings, a couple of carbon dioxide mitigating policies are suggested to the concerned highly polluted developed and developing nations.

Asymmetrical analysis of economic complexity and economic freedom on environment in South Asia: A NARDL approach

The environment has become a growing concern for many countries, as pollution and other environmental degradation can harm human health, economic growth, and overall well-being. This paper probes into the asymmetrical implications of economic complexity and freedom on ecological quality in four South Asian countries from 1995 to 2019. Using Nonlinear Autoregressive Distributed Lag methodology approach, our findings indicate that carbon dioxide (CO2) emissions are intensified by economic freedom both in the long and short term, while negative and positive shocks to economic complexity increase CO2 emissions in the long term. However, a negative economic complexity shock increases CO2 emissions, whereas a positive shock has the opposite effect in the short run. Moreover, our results confirm the validity of the environmental Kuznets curve (EKC) hypothesis in the long run. Furthermore, we find that renewable energy usage and the interaction of FDI and renewable energy usage can help reduce environmental damage in both the short and long run. The findings suggest that countries should focus on attracting foreign direct investment that promotes the use of renewable energy. Additionally, policies aimed at encouraging renewable energy use should be implemented. It is important to note that as economic freedom and complexity increase, there is a corresponding increase in CO2 emissions. Therefore, South Asian policy makers are advised to prioritize the reduction in fossil fuels, the promotion of energy-saving technologies and efficient production, and trade that encourages the transition of renewable energy sources to reduce CO2 emissions.

Urbanization, renewable energy production, and carbon dioxide emission in BSEC member states: implications for climate change mitigation and energy markets

As the world's population grows, the energy demand continues to rise due to advancements in technology and the impact of globalization. The finite nature of traditional energy sources has accelerated the shift toward renewable energy, particularly in developing countries where environmental degradation and declining quality of life are significant concerns. This study delves into the interplay between urbanization, carbon dioxide emissions, economic growth, and renewable energy production in Organization of the Black Sea Economic Cooperation member states, providing new insights into the energy market. By using annual data from 1995 to 2020 and advanced panel cointegration tests, this study provides a comprehensive analysis of the determinants of renewable energy for developing countries. The findings show a substantial and long-term relationship between urbanization, emissions, growth, and renewable energy production. These findings have important implications for policymakers and underscore the critical role of renewable energy in mitigating climate change in developing countries.

Does green finance and institutional quality play an important role in air quality

As the negative repercussions of environmental devastation, such as global warming and climate change, become more apparent, environmental consciousness is growing across the world, forcing nations to take steps to mitigate the damage. Thus, the current study assesses the effect of green investments, institutional quality, and political stability on air quality in the G-20 countries for the period 2004-2020. The stationarity of the variables was examined with the Pesaran (J Appl Econ 22:265-312, 2007) CADF, the long-term relationship between the variables by Westerlund (Oxf Bull Econ Stat 69(6):709-748, 2007), the long-run relationship coefficients with the MMQR method proposed by Machado and Silva (Econ 213(1):145-173, 2019), and the causality relationship between the variables by Dumitrescu and Hurlin (Econ Model 29(4):1450-1460, 2012) panel causality. The study findings revealed that green finance investments, institutional quality and political stability increased the air quality, while total output and energy consumption decreased air quality. The panel causality reveals a unidirectional causality from green finance investments, total output, energy consumption and political stability to air quality, and a bidirectional causality between institutional quality and air quality. According to these findings, it has been found that in the long term, green finance investments, total output, energy consumption, political stability, and institutional quality affect air quality. Based on these results, policies implications were proposed.

Carbon neutrality challenges in Belt and Road countries: what factors can contribute to CO2 emissions mitigation?

As climate warming is intensifying, CO2 emission reduction has aroused the great attention of many governments and scholars. Compared with traditional industrial times, the influencing system of CO2 emission in modern society has taken great changes due to technological advancement, improvement in energy efficiency, and the popularity of the internet. But the current literature has not reached a consensus on this theme. Our study tends to investigate the nexus between international trade, international trade taxes, energy intensity, internet usage, renewable energy, and CO2 emission while incorporating income levels by using the data from Belt and Road countries in the 2008-2020 period. For this purpose, we applied the unit root test, CSD, Granger causality test, AMG, CCMG, and CS-ARDL methods. The results show that energy efficiency, GDP, and internet use have significantly negative effects on CO2 emission, while GDP has significant positive impacts on CO2 emission. By classifying 65 countries along Belt and Road into four groups of low-income level, low-middle income level, upper-middle income level, and a high-income level, the regional heterogeneities of influencing factors of CO2 emission is confirmed. Furthermore, this empirical study provides new insights to policymakers to reduce CO2 emissions through technology innovation, international cooperation, and human capital investment without deteriorating economic growth.

Are globalization, urbanization, and energy consumption cause carbon emissions in SAARC region? New evidence from CS-ARDL approach

This study examines the impact of energy consumption, urbanization, and globalization on environmental degradation proxied by carbon emissions (CO₂) in the South Asian Association for Regional Cooperation (SAARC) countries, namely Sri Lanka, Pakistan, Maldives, Nepal, Bhutan, Bangladesh, and India using data over the period 1990-2018. The cross-sectional autoregressive distributed lag (CS-ARDL), pooled mean group (PMG), and Dumitrescu and Hurlin (D-H) Granger causality techniques are employed for the empirical analysis. First and second-generation panel unit root tests are used to determine the stationary level of all data series which reveals mixed order of integration. The empirical findings show that urbanization, gross domestic product (GDP) per capita income, energy consumption, industrial growth, globalization, and financial development cause CO₂ emissions, while the other variables, namely arable land and innovation, put negative effects on CO₂ emissions. Moreover, the D-H heterogeneous test results exhibit that bi-directional relationship exists between CO₂ and arable land, urbanization, industrial growth, and financial development, while a unidirectional causality exists between CO₂ emissions and GDP per head income. These findings suggest that planned urbanization, investment in renewable energy sources, and effective strategies regarding the economic and financial integration with the global economies are required for a clean and green environment.

The role of information communication technologies on carbon emissions in OECD countries: new evidence from method of moments quantile approach

This paper aims to investigate the effects of information and communication technologies (ICT) on carbon emissions (CO2) in the OECD area. For this purpose, a comprehensive panel data set is utilized covering the 1994-2018 period for 38 countries and a novel method of moments panel quantile regression model which allows to account for fixed effects and endogenous explanatory variables. Results suggest that the ICT, represented by the percentage of individuals using the Internet in the total population, contributes positively to CO2 emissions up to 0.40th quantile and has no effect after this level. The results imply that countries with relatively low per capita emissions are susceptible to the rebound effects, in which better energy efficiency results in increased demand for energy and ICT-related items, hence increasing carbon emissions. At this juncture, one policy idea would be to include a carbon tax into the per-unit purchase price of smartphones, tablets, smart gadgets, and any other relevant ICT items. Additionally, this legislation can assist decrease conspicuous consumption, which can be viewed as a trigger for the demand for ICT products. Additionally, these countries should encourage enterprises to invest in and employ energy-efficient technologies through tax incentives or subsidies.

Financial Institutional and Market Deepening, and Environmental Quality Nexus: A Case Study in G-11 Economies Using CS-ARDL

This study presents a new insight into the dynamic relationship between financial institutional deepening (FID), financial deepening, financial market deepening (FMD), foreign direct investment (FDI), economic growth (GDP), population, and carbon dioxide emissions (CO₂e) in the G-11 economies by employing a cross-sectionally augmented autoregressive distributed lag (CS-ARDL) approach during 1990-2019. The outcomes from the CS-ARDL and dynamic common correlated effects mean group (DCCEMG) models shows that financial deepening, GDP, FDI, and population degraded environmental quality both in the short run and the long run. Contrary to this, FID and FMD improves environmental quality in these countries. The government should work to maximize financial institutions (access, depth, efficiency) and financial markets (access, depth, efficiency) to reduce the CO₂e. A strong positive and in-phase correlation of CO₂e with economic growth and population is observed for G-11 countries. These results suggest policy makers should further improve financial institutions by creating opportunities for their populations. Moreover, the governments of G-11 countries should revise their foreign direct investment policies and attention should be given to import efficient means of energy production.

The assessment of environmental sustainability: The role of research and development in ASEAN countries

Considering the set targets of the Association of Southeast Asian Nations (ASEAN) to increase research and development (R&D) expenditures, this study probes the long-term and causal association between renewable energy (RE), nonrenewable energy (NRE), economic growth (GDP), and ecological footprints (EFs) in the context of the environmental Kuznets curve (EKC). Empirical evidence is based on the panel data throughout the period 1990-2016 for the selected six ASEAN economies. The Westerlund co-integration test confirms the long-run association between R&D, RE, NRE, GDP, and EF. The results of Fully Modified Ordinary Least Squares (FMOLS) and Dynamic Ordinary Least Squares (DOLS) confirm the presence of EKC and show that R&D expenditures lower EF significantly. A 1% increase in R&D and RE decreases EF by 0.01% and 0.27%, respectively. Moreover, a 1% increase in GDP and NRE increases EF by 5.52% and 0.17%, respectively. This means that investment in R&D will enhance air quality by lowering EF in estimated panel countries. Moreover, NRE consumption and GDP increase EF. The panel causality results confirm the bidirectional association between GDP, RE use, R&D expenditures, and EF. To achieve a desirable goal of a clean environment, R&D expenditures hold a strong position for ASEAN countries. This finding should encourage governments to involve public and private investments in R&D programs for energy efficiency. Integr Environ Assess Manag 2022;18:1313-1320. © 2021 SETAC.

A Conceptual Framework of Climate Action Needs of the Least Developed Party Countries of the Paris Agreement

This article provides a framework for conceptualizing climate action needs grounded in the nationally determined contributions (NDCs) of the least developed party countries (LDPCs) of the Paris Agreement (PA). It examines the NDCs of 35 LDPCs recorded in the NDC public registry of the United Nations Framework Convention for Climate Change (UNFCCC). A grounded theory approach is adopted to assess what these countries need to materialize their NDCs under the PA. A conceptual framework of needs is figured out through an iterative process of data collection and analysis in three cycles: (1) open and in vivo coding; (2) axial coding; and (3) theoretical or selective coding. The data are analyzed with the help of NVIVO software. The results provide a verifiable framework of needs for climate action, which includes 55 saturated need factors extracted from the writing excerpts of NDCs, 17 sub-categories (axial codes) with climate finance and technology transfer as the most prominent, and 7 theoretical or selective categories with mobilize, educate, governmental, synergic, levels, equity, and public health. It provides a baseline for policy, research, and action from the developed party countries to uphold their PA obligations.

Unfolding FDI, Renewable Energy Consumption, and Income Inequality Nexus: Heterogeneous Panel Analysis

We aim to examine the nexus between Foreign Direct Investment (FDI), Renewable Energy Consumption (REC), and income inequality across selected High-Income Countries (HIC), Upper Middle-Income Countries (UMIC), Lower Middle-Income Countries (LMIC), and Low-Income Countries (LIC). Given the cross-sectional dependency, slope homogeneity, and stationarity properties, we find that the aforementioned variables across all the regions are cointegrated in the long run (LR). For LR estimation, we use the Cross-Sectional-Autoregressive Distributed Lag (CS-ARDL) approach. For the HIC and the UMIC, an increase in FDI increases REC, which in turn causes income inequality to decrease. In the case of LMIC, an increase in REC causes an increase in FDI and decreases income inequality. However, we could not establish a significant relationship with the LIC. We also provide some useful recommendations, such as increased institutional efficiency and promotion of renewable energy investments through higher access to finance.

Achieving Environmental Sustainability in Africa: The Role of Renewable Energy Consumption, Natural Resources, and Government Effectiveness—Evidence from Symmetric and Asymmetric ARDL Models

This study investigates the symmetric and asymmetric linkages within environmental sustainability proxied by ecological footprint (EFP), natural resources (NRR), renewable energy consumption (REC), urbanization (URB), human capital (HC), and government effectiveness (GE) in 27 African countries divided into two subgroups (ecological deficit countries and ecological reserve countries) over the period 1990 to 2018. The study employs the auto-regressive distributed lag (ARDL) model to investigate the symmetric (linear) effect and the nonlinear auto-regressive distributed lag (NARDL) model to study the asymmetric (nonlinear) effects of the variables on EFP. Results of ARDL show that a 1% increase in REC is projected to reduce ecological footprint by 0.17 and 0.2% in ecological deficit and ecological reserve countries. A 1% increase in NRR is estimated to increase ecological footprint by 0.02% in ecological deficit countries but has no impact on the environment in countries with ecological reserves. Similarly, a 1% rise in GE is estimated to increase EFP by 0.04% in Africa but has no impact on the environment in ecological deficit countries. NARDL estimations decomposed REC into positive (negative) shocks, which show that a 1% increase (decrease) in REC is projected to decrease EFP by 0.16% (0.13%) in countries with ecological reserves. Similarly, a positive (negative) shock in NRR is expected to decrease EFP in ecological reserve countries and increase EFP in ecological deficit countries. Results of the Wald tests prove the existence of long-run asymmetry among the variables. The findings indicate that renewable energy consumption enhances environmental quality, while economic growth and natural resource rents reduce environmental quality in Africa over the sampled period.

Can Financial Institutional Deepening and Renewable Energy Consumption Lower CO2 Emissions in G-10 Countries: Fresh Evidence from Advanced Methodologies

To tackle the challenges associated with global warming and climate change, several countries set their targets to lower carbon emissions in accordance with COP21 (Paris Conference). Even though studies highlighted the different aspects that contribute to environmental degradation, there still exists the scarcity of adequate research that emphasizes the environmental implications of financial institutional deepening, renewable energy consumption (REC), and technology innovations. Therefore, this study investigated the significance of financial institutional deepening, REC, gross domestic product (GDP), imports, exports, and technology innovations to achieve sustainability in G-10 countries, namely The Netherlands, Germany, France, Switzerland, United Kingdom, Sweden, Japan, Belgium, Canada, and Italy from 1990 to 2020. The results obtained from cross-sectionally augmented autoregressive distributed lag (CS-ARDL) and the dynamic common correlated effects mean group (DCCEMG) models reveal that financial institutional deepening and imports positively impact CO₂ emissions (CO₂e) both in the long and short run. A 1% increase in financial institutional deepening and import will increase CO₂e by 0.5403% and 0.2942% in the short run and 0.2980% and 0.1479% in the long run levels, respectively. Contrary to this, REC, GDP, exports, and technology innovations improve environmental quality in these countries. The Dumitrescu & Hurlin causality test shows bidirectional causality between imports and CO₂e, GDP and CO₂e, exports and CO₂e, and financial institutional deepening and CO₂e, compared to unidirectional causality from technology innovations to CO₂e and from REC to CO₂e. Apart from this, the outcomes suggest that policymakers in G-10 countries have to consider their financial markets and firms to revise their current environmental policies.

Environmental degradation and financial development: do institutional quality and human capital make a difference in G11 nations?

Developing nations are rushing towards economic developments; however, this development is increasing the ecological footprints. In this regard, it has become important to identify the factors of environmental degradation. For sound economic growth, countries are enhancing their human resources with sound financial institutions. Therefore, this work examines the effects of human capital (HC), financial development (FD), and institutional quality (IQ) on ecological footprints (EF) in the group of 11 countries. This work also checks the interactional effect of FD, human capital, and IQ on ecological footprints. This work employs the annual data of 1984-2017 and utilizes the cross-sectional autoregressive distributed lag approach for panel data analysis (CS-ARDL). The findings show that FD is degrading the environmental quality by 0.04%. Furthermore, IQ and HC are improving environmental quality by 0.07% and 0.01%. The findings also reveal that FD is lowering ecological footprints through the channel of HC and IQ. Based on the findings, these countries need to extend human capital with an efficient institutional network for environmental sustainability. These countries need to allocate funds to the health and education sector to develop human capital. Moreover, human resource management tools should be strengthened to cope with the challenges of environmental problems.