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The importance of renewable energy consumption and FDI inflows in reducing environmental degradation: Bootstrap ARDL bound test in selected 9 countries
... In other words, foreign direct investments can contribute positively to environmental protection with advanced technologies and environmentally friendly practices. The Pollution Paradise Hypothesis suggests that strict environmental policies in developed economies create a competitive advantage for polluting industries that move to less developed regions (Hoffmann et al., 2005;Acharyya, 2009;Blanco et al., 2013;Caglar, 2020;Singhania and Saini, 2021). According to this hypothesis, MNCs invest in regions that offer low costs and labour advantages, leading to an increase in pollution. ...
... In this context, the strategy of maintaining a healthy balance between foreign direct investments and environmental protection emerges as an important research topic. In particular, based on the pollution haven and pollution halo hypotheses (Behera and Dash, 2017;Liu et al., 2019;Caglar, 2020), the relationship between foreign direct investment and environmental pollution should be analysed in more detail. ...
Purpose: This study tests the Pollution Paradise Hypothesis by examining the role of FDI and economic growth on China's load factor over the period 1979-2021. The main objective of this study is to assess the environmental impact of FDI and economic growth in China. Design/Methodology: Various econometric analyses have been carried out to examine FDI, economic growth indicators and the freight capacity factor. In this context, conventional ADF and Fourier ADF unit root tests were applied to the freight capacity factor, FDI and economic growth series and then to the shocks to these series. Findings: In conclusion, it is emphasised that in order to achieve sustainable development goals in China, policy makers should adopt more effective environmental sustainability policies, taking into account the impact on FDI and economic growth. Limitations: It tests the Pollution Paradise hypothesis by examining the role of FDI and economic growth on the load factor in China. The research is therefore specific to China. Originality/Value: This study aims to contribute to the literature by assessing the environmental impact of FDI in China in a more holistic way, and from a perspective that has not been analysed before.
... For instance, between 2000 and2017, FDI constituted 3.6% source of capital in Africa (Adjei-Mantey & Adams, 2023;World Bank, 2018). Few studies (Adjei-Mantey & Adams, 2023;Caetano et al., 2022;Polat, 2018;Xu et al., 2021) have examined the nexus between FDI, and renewable energy, with mixed results due to regional differences and country context specific factors (Caglar, 2020;Shahbaz et al., 2015). While some literature documents a pollutant effect of FDI, the contrary effect has also been found (Doytch & Narayan, 2016;Mielnik & Goldemberg, 2002;Nepal et al., 2021;Xu et al., 2021). ...
Despite the growing importance of foreign direct investment, official development assistance, financial development, and institutional quality in Africa, their plausible combined impact on energy transition has not been explored, creating a void in literature. Our paper contributes to the literature by analysing the effect of foreign direct investment, official development assistance, financial development, and institutional quality on energy transition in Africa between 2009 and 2020. The panel autoregressive distributed lag (PARDL) model was employed for the analysis. The empirical evidence shows that foreign direct investment, official development assistance, and institutional quality significantly increased renewable energy consumption on the continent in the long run. On the other hand, financial development, measured as domestic credit to private sector by banks, tends to reduce renewable energy consumption on the continent both in the short and long runs. This indicates that foreign direct investment, official development assistance, and institutional quality foster just energy transition in Africa, while financial development tends to inhibit energy transition on the continent. These findings underscore the necessity for nuanced policy interventions that integrate foreign direct investment, official development assistance with institutional quality objectives, for the promotion energy transition. Policies are also needed to deliberately encourage banks to provide credit facilities for energy transition investments in Africa.
... The exacerbating RE investments have given rise to the green finance market (GFM) and thereby positively affect the environmental quality of society [9]. Despite all the benefits that RE offers, the authors of [10] argue that RE may be the cause of an increase in security risk and geopolitical conflicts. ...
Renewable energy has emerged as a transformative and essential alternative in the global energy sector. Many countries are striving to achieve the Sustainable Development Goals (SDGs) established by the United Nations for 2030, particularly the goal of ensuring that all individuals have access to clean and affordable energy. This paper re-examines the impact of economic growth (EG), trade openness (TO), exchange rates (ER), foreign direct investment (FDI), green finance (GF), and oil prices (OL) on renewable energy consumption (REC) across 14 Southern African countries: South Africa, Botswana, Lesotho, Namibia, Tanzania, Madagascar, Mauritius, Kenya, the Comoros, Zambia, Eswatini, Rwanda, Angola, and Mozambique, during the period of 2000 to 2022. This study employed cointegration and unit root tests, as well as the RALS-EG and MMQR models, to estimate the long-run relationships among the variables. The results reveal that renewable energy consumption is positively and directly related to economic growth, trade openness, exchange rates, green finance, and foreign direct investment across all quantiles (q05–q95), with no evidence of asymmetric effects. These findings suggest that economic growth, green finance, and foreign direct investment are crucial for fostering renewable energy innovation in Southern African countries. Policymakers are encouraged to prioritize strategies that enhance these factors as a foundation for achieving sustainable energy solutions.
... The influx of multinational corporations expanded industrialization, and increased consumerism drives deforestation, pollution, and excessive resource consumption. This aligns with the pollution haven hypothesis (PHH), which posits that globalization shifts pollution-intensive industries to countries with weaker environmental regulations, further amplifying ecological degradation [138]. Additionally, ref. [139] argues that globalization intensifies carbon emissions by increasing trade, transportation, and industrial production, leading to a larger environmental footprint. ...
Environmental degradation poses a significant global challenge which necessitates innovative strategies to achieve sustainability. This study investigates the impact of technological innovation (TCN), higher education (EDU), green finance (GRF), globalization (GLI), and entrepreneurship (ENT) on environmental quality (EQ) in G20 countries. The study uses panel data from 2000 to 2020 to investigate relationships between study variables. Among the various diagnostic tests conducted, the Variance Inflation Factor (VIF) confirms that multicollinearity is not present. Furthermore, the cross-sectional dependence (CSD) test identifies cross-sectional interdependence among the study variables. Moreover, the slope homogeneity (SL) test indicates heterogeneity in the data. For the stationarity check, the Cross-Sectional Augmented Im–Pesaran–Shin (CIPS) test indicates mixed results. Finally, the study uses the Cross-Sectionally Augmented Autoregressive Distributed Lag (CS-ARDL) and the Generalized Method of Moments (GMM) for the long- and short-run analysis of variables. The outcomes of CS-ARDL indicate that GLI has a significant negative impact on EQ, hence causing deterioration in G20 economies. On the other hand, TCN, EDU, GRF, and ENT show positive and significant impacts on EQ, therefore enhancing environmental outcomes. Additionally, the Dumitrescu–Hurlin causality test reveals bidirectional causality, which highlights the interconnected relationship between TCN and ENT with EQ. However, GRF, EDU, and GLI demonstrate unidirectional causality with EQ. The takeaway of the study focuses on the importance of policies in promoting green innovation, resource efficiency, and sustainable practices to advance environmental quality within G20 economies.
... It is imprudent to check the stability of the data prior to examining any correlations between the eras [89]. Whether the dataset exhibits stationarity in integrated order zero (I(0)) or integrated order one (I(1)), the current study first examines the links between the response and its independent factors. ...
The current paper investigates the influences of AI innovation, GDP growth, renewable energy utilization, the digital economy, and industrialization on CO2 emissions in the USA from 1990 to 2022, incorporating the ARDL methodology. The outcomes observe that AI innovation, renewable energy usage, and the digital economy reduce CO2 emissions, while GDP expansion and industrialization intensify ecosystem damage. Unit root tests (ADF, PP, and DF-GLS) reveal heterogeneous integration levels amongst components, ensuring robustness in the ARDL analysis. Complementary methods (FMOLS, DOLS, and CCR) validate the results, enhancing their reliability. Pairwise Granger causality assessments identify strong unidirectional connections within CO2 emissions and AI innovation, as well as the digital economy, underscoring their significant roles in ecological sustainability. This research highlights the requirement for strategic actions to nurture equitable growth, including advancements in AI technology, green energy adoption, and environmentally conscious industrial development, to improve environmental quality in the United States.
... It is imprudent to check the stability of the data prior to examining any correlations between the eras [89]. Whether the dataset exhibits stationarity in integrated order zero (I(0)) or integrated order one (I(1)), the current study first examines the links between the response and its independent factors. ...
The current paper investigates the influences of AI innovation, GDP growth, renewable energy utilization, the digital economy, and industrialization on CO2 emissions in the USA from 1990 to 2022, incorporating the ARDL methodology. The outcomes observe that AI innovation, renewable energy usage, and the digital economy reduce CO2 emissions, while GDP expansion and industrialization intensify ecosystem damage. Unit root tests (ADF, PP, and DF-GLS) reveal heterogeneous integration levels amongst components, ensuring robustness in the ARDL analysis. Complementary methods (FMOLS, DOLS, and CCR) validate the results, enhancing their reliability. Pairwise Granger causality assessments identify strong unidirectional connections within CO2 emissions and AI innovation, as well as the digital economy, underscoring their significant roles in ecological sustainability. This research highlights the requirement for strategic actions to nurture equitable growth, including advancements in AI technology, green energy adoption, and environmentally conscious industrial development, to improve environmental quality in the United States.
... Especially in developing markets, corruption and domestic political malfeasance reduce incentives for companies to use renewable energies at the corporate level. In a comparative analysis on developed and emerging markets, the accelerated progress of renewable energy consumption was the only nonnegative domestic exteriority in the countries, while this was not the case in other emerging markets (Zhang et al., 2023;Caglar, 2020). ...
... Similarly, Bekun et al. [54], employing the panel PMG version of ARDL, analyzed data from 16 EU countries and found an inverse relationship between renewable energy usage and air pollution. In a study focusing on nine green countries, Caglar [55] utilized the bootstrap ARDL model and confirmed the mitigating effects of renewable energy on CO 2 emissions. ...
The motivation for this research stems from the United Nations Sustainable Development Goals (UN SDGs), specifically SDGs 7, 11, 12, and 13, which focus on the mitigation of climate change and sustainable economic development. This study examined the impact of renewable energy use, institutional quality, and production expansion on consumption-based carbon dioxide (CCO2) emissions in BRICS countries (Brazil, Russia, India, China, and South Africa) from 1996 to 2020. To achieve this, we applied advanced econometric techniques, including second-generation cointegration and unit root tests, along with the novel panel method of moments quantile regression (MMQR). The Westerlund cointegration test confirmed the presence of a long-run co-movement among renewable energy usage, economic growth, institutional quality, and environmental quality, suggesting a stable equilibrium relationship between these variables. The results from MMQR reveal that GDP has a positive and statistically significant effect on CCO2 emissions across all quantiles, indicating that economic expansion contributes to environmental degradation. In contrast, renewable energy consumption and institutional quality show negative and significant impacts on CCO2 emissions, indicating their mitigating effect on environmental deterioration. As a robustness check, the findings from fixed-effect OLS (FE-OLS), generalized method of moments (GMM), and common correlated effects mean group (CCEMG) estimations broadly confirm the results of MMQR. These findings underscore the importance of renewable energy consumption and strong institutional frameworks in promoting environmental sustainability.
... For instance, the study of Doytch and Narayan (2016) investigated whether FDI affected renewable energy consumption, and their study found that FDI encourages the use of clean energy. Other studies, such as (Amri, 2016;Emre Caglar, 2020;Kang et al., 2021;Mert & Bölük, 2016;Shahbaz et al., 2022;Shahzadi et al., 2023), also opined that FDI is a fundamental policy instrument for advancing environmental sustainability by supporting the development and adoption of cleaner technologies. As FDI often channels capital into energy-efficient projects and sustainable practices, it reduces fossil energy consumption. ...
This research investigates he optimal renewable energy mix for the European Union to enhance its energy security and sustainability. Using panel data from 2012 to 2022, covering 26 EU countries, the following estimation techniques are applied: ordinary least squares, fixed effect regression, and the two-step generalised method of moments. The findings highlight wind energy as a critical component in the EU’s energy strategy due to its consistently positive impact on the energy mix. The results also reveal challenges in integrating solar photovoltaic energy, largely due to regional disparities in solar irradiance and high initial infrastructure costs. Accordingly, foreign direct investment does not significantly impact the energy mix, suggesting a need for better alignment between investment flows and energy policies. In the context of past energy infrastructure decisions continuously influencing the current energy mix, we emphasise the importance of continuity in energy policy. These insights can inform policymakers in refining the EU’s energy strategy as the latter strives to meet its 2030 and 2050 climate and energy targets aligning with Sustainable Development Goal (SDG) 7 (Affordable and Clean Energy) and SDG 13 (Climate Action).
... We have also considered the assumption of this theory, which states that an organism's behavior change is influenced by the quality of stimulus, which is similar to the learning process. In the context of climate change, environmental stimuli such as extreme weather events, scientific reports, and media coverage can activate cognitive processes that influence individuals' perception of the issue and their willingness to take action [77][78][79][80]. The S-O-R theory suggests that the relationship between environmental stimuli and behavioral responses is mediated by internal factors such as motivation, attitudes, and values [67,81]. ...
... Internationally, ref. [15] used the ARDL model to find a negative relationship between renewable energy and carbon emissions in China. Similarly, ref. [16] demonstrated a negative relationship between technological factors and environmental emissions in Pakistan. ...
This study explores the long-run relationship among the environmental footprint (EnF), renewable energy consumption, energy use, industrial growth, and urbanization in Saudi Arabia from 1990 to 2023, employing the Autoregressive Distributed Lag (ARDL) model, alongside Fully Modified Ordinary Least Squares (FMOLS), Dynamic Ordinary Least Squares (DOLS), and Canonical Cointegrating Regression (CCR) for robustness checks. Results indicate a significant long-term relationship among the variables, with renewable energy adoption emerging as a crucial factor in reducing carbon emissions. The ARDL bounds test confirms the existence of cointegration, revealing the dynamic interplay among renewable energy, economic growth, and environmental sustainability. The findings show that renewable energy consumption significantly reduces the environmental footprint (CO2 emissions), supporting Saudi Arabia’s Vision 2030 goals for economic diversification and sustainable development. However, industrial expansion, while critical for economic growth, still contributes to increased emissions, underscoring the need for further investment in clean technologies. The study also highlights the role of urbanization, which, while essential for development, poses challenges for environmental sustainability. Short-term dynamics, represented by the Error Correction Model, indicate a fast adjustment speed toward equilibrium, with deviations corrected by approximately 52% each period. The study offers valuable insights for policymakers aiming to balance industrial growth with environmental protection, emphasizing the need for strategic investments in renewable energy and energy efficiency. This research contributes to the understanding of energy–economy–environment interactions in oil-rich economies, providing a foundation for future studies to explore the impact of advanced technologies and policy interventions on sustainable development
... Cointegration tests are frequently employed to assess the long-term equilibrium relationship among variables, as seen in studies by Lapinskienė [24], Mahmood [25], and Pata [21]. Granger causality tests are used in several studies [21,22,26] to investigate the direction of causality between economic activities, environmental degradation, and other factors. This technique helps identify whether changes in one variable predict changes in another. ...
With rising concerns about environmental sustainability, examining the economic-environmental nexus is essential. This study investigates the relationship between economic growth (GDP), renewable energy consumption (RENC), urbanization (URB), and foreign direct investment (FDI) with Norway’s ecological footprint from 1990 to 2023. Guided by the Environmental Kuznets Curve (EKC) hypothesis, we aim to understand how these factors influence Norway’s environmental impact over time. Using an Autoregressive Distributed Lag (ARDL) model, the study captures both the short- and long-term effects of these variables on the ecological footprint, and model stability is confirmed through the Cumulative Sum of Squares (CUSUM) test. The findings reveal a U-shaped EKC pattern, where initial economic growth reduces the ecological footprint, but beyond a certain GDP threshold, environmental pressures increase. Renewable energy consumption is shown to lower the ecological footprint significantly, supporting Norway’s sustainability goals. Conversely, FDI is associated with increased environmental impact, potentially due to resource-intensive projects. These insights underscore the need for balanced policies that harmonize economic development with environmental preservation. Policymakers are encouraged to foster green FDI, prioritize renewable energy investments, and implement sustainable urban planning to maintain Norway’s trajectory toward ecological sustainability.
... Internationally, ref. [15] used the ARDL model to find a negative relationship between renewable energy and carbon emissions in China. Similarly, ref. [16] demonstrated a negative relationship between technological factors and environmental emissions in Pakistan. ...
Environmental Footprint; Co-integration; Renewable energy; Industrialization; Energy
... Fan and Hao (2020) argue that FDI is crucial in developing renewable energy projects, often necessitating substantial financial and technological resources. Caglar (2020) reinforces this perspective by highlighting that FDI increases renewable energy consumption. This increase indicates a shift towards enhanced energy consumption from renewable and nonrenewable sources. ...
... In 2021, global carbon dioxide emissions rose significantly, reaching a record level of 36.3 billion tons, up 6% from the previous year. This increase is mainly due to the rapid economic recovery from the COVID-19 pandemic, which relied heavily on coal as an energy source (Caglar, 2020). Carbon dioxide emissions from fossil fuel combustion are the primary cause of climate change, as their concentration in the atmosphere has reached the highest level in human history. ...
This paper investigated the impact of economic policy uncertainty, energy consumption, and trade openness on CO2 emissions in the BRICS countries (Brazil, Russia, India, China, and South Africa) from 1991 to 2023. According to the Panel Pooled Mean Group-Autoregressive Distributed Lag Model (PMG-ARDL), economic policy uncertainty has a significant and negative impact on carbon emissions in the long run, while it has an insignificant effect in the short run. Additionally, primary energy consumption has a significant and positive impact on carbon emissions in the short and long run. Economic growth and trade openness have a positive and significant impact on carbon emissions in the long run. The panel causality test by Dumitrescu and Hurlin (2012) indicated a bidirectional relationship between CO2 and energy consumption, trade openness, and CO2, but a unidirectional causality from CO2 to economic policy uncertainty and economic growth. The study proposes making critical changes in energy policies while accounting for economic policy uncertainty; examining the various types of uncertainty and their effects to develop a climate policy based on evidence and facts and focusing on the discovery of alternative sources of clean energy.
... Climate change and global warming, which have been increasing in severity in recent years and have become a significant problem worldwide, have become a primary concern (Caglar, 2020;Güney, 2017;Işık et al., 2024a;Nejati & Taleghani, 2022). In Paris in 2015, 196 countries agreed to reduce global carbon dioxide (CO 2 ) emissions gradually. ...
A capable government with stability can ensure the strict implementation of envisioned environmental policies. Solar power has a great potential. Therefore, this study examines the relationships between solar energy, government effectiveness, and carbon dioxide (CO2) emissions. For this purpose, we used the data of 37 The Organization for Economic Co-operation and Development (OECD) countries from 1996-to 2020. We considered slope homogeneity and cross-section dependence and in panel data analyses. According to the estimates, there is a cointegration relationship between CO2 emissions, government efficiency, solar energy, fossil energy, and GDP. This study mainly featured panel quantile regression (PQR) estimations. According to PQR estimates, government effectiveness harms CO2 emissions. The negative effect of government effectiveness on CO2 emissions continues in all quantiles. In other words, government effectiveness in reducing CO2 emissions in countries with low or high CO2 emissions levels is rather stable and significant. PQR estimates showed that solar energy harmed CO2 emissions in all quantiles. Moreover, this negative effect increases almost uninterruptedly, from the 10th to the 90th quantile. In other words, as the CO2 emissions level rises, the CO2 emissions reduction level of solar energy also increases. These estimation results show how valuable and indispensable government effectiveness is to the success of the Paris Agreement and the 2030 Sustainable Development Goals. As a result, this study recommends that governments provide bureaucratic facilities that will facilitate private-sector solar energy investments.
... As per the findings of the study, there exists a statistically significant negative correlation between carbon footprint and inward FDI, economic growth, and industrial modernization in the country. In another study by Caglar (2020), the causality shared by FDI, renewable and non-renewable energy usage, fiscal development, and CO 2 levels have been examined in nine countries including Italy by employing the ARDL method. The results reported a negative correlation between carbon emissions and sustainable energy usage. ...
Recently, a significant amount of carbon dioxide emissions has grabbed the attention of global community. Thus, this study attempts to investigate the impact of inward foreign direct investment, and economic growth on carbon dioxide emissions in case of Italy. We took Italy as our sample country as it has committed to achieve carbon neutrality by 2050. We took annual time series data for the dependent variable (CO 2) and explanatory variables (GDP, FDI, Natural Resources) for the period ranging from 1990 to 2021. To examine the long run relationship between the variables we used autoregressive distributed lags bounds test of cointegration. The empirical findings revealed the existence of long-run relationships among the variables of the model. Furthermore, we also found that natural resources unidirectionally caused CO 2 and GDP.
... Further, tariff rates, percentage of trade in GDP (gross domestic product), and legal institutions that constitute economic policy are critical in determining FDI potential. Another study identified a significant long-term relationship between foreign direct investment, renewable energy consumption, and economic growth in some countries (Caglar 2020). All economic factors such as per capita GDP, inflation rate, external debt, exchange rate, exports, the ease of doing business, and the unemployment rate significantly play a critical role in determining FDI potential in India. ...
Foreign direct investment (FDI) plays a critical role in economic growth and development. It is imperative to examine factors such as socioeconomic, political, and environmental factors that are responsible for determining the potential to attract foreign investment. The paper attempts to evaluate the attractiveness of FDI in India in other words, the potential of India to attract foreign direct investment. Secondly, the study investigates the role of FDI potential in the real FDI inflow in the country. The paper constructs a comprehensive index for the attractiveness of foreign direct investment for India, which reflects the preparedness or potential of the country to provide a conducive environment for foreign investments. The study adopts principal component analysis (PCA) to formulate an index that reflects socioeconomic, political, and environmental aspects of FDI. Appropriate indicators are used to reflect all the dimensions, such as social, political, environmental, economic, infrastructure, and human capital. By regressing the FDI potential index on the interest rate, final consumption, public–private partnership, and potential for FDI on actual FDI inflow, the role of FDI potential is highlighted. It is revealed that FDI potential and FDI inflows are significantly positively correlated as well as significantly positively determine the FDI inflows as revealed by the regression results. Therefore, infrastructure, socioeconomic factors, and human capital also ensure political stability and governance are favorable in promoting more FDI inflow. In addition, the policies favoring public–private partnership and supporting all dimensions of FDI potential index must be promoted.
... According to this argument, the relocation of polluting projects to low-income nations in an effort to lower manufacturing costs is the result of foreign direct investment (FDI). Additionally, nations that experience economic growth tend to use more energy and release more pollutants into the atmosphere, which causes the quality of the environment to gradually decline (Caglar, 2020;Singhania & Saini, 2021). According to Tukhtamurodov et al. (2024), trade openness, energy consumption, and foreign direct investment all have an impact on how much carbon dioxide is generated in the BRICS nations. ...
Sustainable economic growth is vital for China to improve living standards, reduce poverty, enhance infrastructure , foster green innovation, reduce consumption of natural resources, maintain social stability, and increase global competitiveness. This paper uses the ARDL model to study the relationships over the short-and long-term between China's population dynamics, inflation, foreign direct investment, economic development, and rising carbon dioxide emissions from 1990 to 2023. The findings indicate that population expansion has a short-term negative influence on economic development, while CO 2 emissions, foreign direct investment, and inflation all have beneficial effects. Population growth, CO 2 emissions, and inflation all contribute positively to economic development, while FDI has long-term detrimental effects. By prioritizing policies that promote environmentally friendly practices, encourage domestic innovation, and foster inclusive economic growth, China can achieve long-term prosperity while mitigating adverse impacts on the environment and society.
... The rising occurrence of severe weather events due to climatic changes has started to significantly impact both the economy and society (Tol, 2024). Existing literature provides evidence that countries with greater susceptibility to climate change experience reduced levels of FDI inflows (Caglar, 2020;Shear et al., 2023). Specifically, according to legitimacy theory (O'donovan, 2002), to achieve and sustain organizational legitimacy when making FDI, MNEs must adapt to local policies and regulations and comply with stringent environmental standards in the host country (Adu et al., 2023;Ikram et al., 2019). ...
The impact of climate change on foreign direct investment (FDI) at the corporate level is insufficiently explored, despite extensive discussions on environmental protection. This research utilizes novel panel data (2009–2022) on Chinese A‐share listed firms, using a two‐way fixed‐effect estimator to probe whether and how a firm's exposure to climate change influences the inflow of FDI, while considering the moderating role of environmental, social, and governance (ESG). The results show: (i) firm‐level exposure to climate change harms inward FDI inflow; (ii) host country firms can mitigate the negative effect of exposure to climate change on inward FDI inflow by strengthening their ESG performance; (iii) exposure to climate change primarily impacts FDI inflow through environmental taxes and green investments; (iv) the detrimental effect of climate change risk on incoming FDI is more pronounced in the central and eastern region of China, and among non‐state‐owned firms. These findings provide insightful theoretical and practical implications for addressing SDG 13 (Climate Action) challenges and for attracting multinational investments in developing countries like China.
... On the other hand, FDI can improve EQ by transferring cutting-edge technology from the source economy to the host one, leading to increased investment in green innovation. Such a potential contribution of FDI to ecological well-being is known as the "pollution halo" hypothesis (Caglar, 2020). ...
In recent decades, the detrimental impacts of climate change have been increasingly felt worldwide. This is due to the extreme consumption of natural resources to fuel economic activity. Confronting a widening ecological deficit, humanity must urgently accelerate its journey toward sustainable development goals (SDGs). This demands active efforts to curb environmental pollution and protect natural resources, safeguarding the planet for future generations. Since Brazil has high biocapacity and ecological areas, the impact of energy resources on ecological sustainability policies cannot be excluded. Moreover, Brazil holds a vital position in the world for global foreign direct investment flows. In this regard, this paper considers the asymmetric impact of mineral rents and foreign direct investments when investigating Brazil's environmental sustainability. In addition, it evaluates elements like economic growth and low-carbon energy consumption from 1970 to 2021. To this end, the research applies the Fourier nonlinear autoregressive distributed lag model and draws three significant conclusions. First, resource extraction undermines environmental sustainability. Second, the inflow of foreign direct investment reduces the load capacity factor, implying that the pollution haven hypothesis holds for Brazil. Third, low-carbon energy consumption contributes to environmental sustainability. Our findings highlight the critical role of regulating mineral resource rents in achieving SDGs in Brazil. Moreover, increasing investment in clean energy sources and transitioning toward low-carbon energy can promote sustainable development in Brazil. The Brazilian government should abandon mineral extraction, focus on low-carbon energy consumption, and prevent companies from destroying nature by introducing strict environmental regulations for foreign investment flows.
... This theory suggests that multinational corporations may exploit lax environmental standards in developing countries to minimize compliance costs and take advantage of natural resources without adequate environmental safeguards. Empirically, several studies indicated that there is a negative linkage between environmental sustainability and FDI (Gray, 2002;Perkins & Neumayer, 2008;Omri et al., 2014;Acheampong, 2019;Caglar, 2020;Singhania & Saini, 2021). Their findings show that (i) FDI enables multinational companies in developed countries to transfer polluting units to developing countries where environmental standards are less stringent, in order to reduce their implementation costs; (ii) FDI leads to increased carbon emissions in host countries due to the use of obsolete and environmentally unfriendly technologies; and (iii) FDI can lead to environmental degradation by stimulating industrialization through increased production, depletion of natural resources, and demand for fossil fuels. ...
Achieving the Sustainable Development Goals (SDGs) in developing economies, especially in sub-Saharan Africa (SSA), has become a focal point of discussion. This study contributes to this discourse by investigating the effects of international capital flows on SDGs in SSA, with a specific focus on the moderating mechanisms that influence these effects. Using data from 41 SSA countries spanning 2000 to 2018, the findings emphasize the crucial role of governance quality and ICT diffusion as effective factors moderating the nexus between international capital flows and SDGs. The study reveals a nuanced impact of international capital flows on sustainable development, encompassing both positive and negative effects across economic, social, and environmental dimensions. However, the presence of good governance practices and widespread diffusion of information and communication technologies (ICTs) serves as crucial conditional factors, enhancing the positive effects of international capital flows on economic and social sustainability while simultaneously mitigating their potential adverse effects on environmental sustainability. Through improvements in governance structures and the promotion of ICT diffusion, policymakers can create an environment conductive to maximizing the benefits of international capital flows while minimizing their adverse repercussions, thereby fostering sustainable development in sub-Saharan Africa.
... A negative linkage between REC and air pollution has been confirmed. Caglar (2020) highlighted the inverse correlation between renewable energy and carbon emissions in a study conducted across nine environmentally conscious nations. The bootstrap ARDL model was employed to analyze the data. ...
... Hypothesis: Urbanization has positive/ negative effect on CO2 emission CO2 Emissions and foreign direct investment Caglar (2020) looks at nine nations ranked highest by the Climate Change Performance Index 2018 (CCPI) to analyses the relationship between carbon emissions, foreign direct investment, economic growth, and renewable and non-renewable energy sources. The results showed a significant long-term association between foreign direct investment in renewable energy and economic growth in several nations, although short-term outcomes were different for nine countries. ...
This study's main goal is to objectively investigate how stock market expansion, Urbanization FDI, and foreign direct investment (FDI) inflows affect CO2 emissions. This study also explores how the use of renewable energy affects CO2 emissions and economic output in a panel of G20 nations. The whole sample as well as sub-samples of rich and developing economies of the G20 member countries were used in the empirical analysis. The study tells that due to rise in urbanization the carbon dioxide emission reduced. Similarly, THE GDP growth and CO2 emission are positively related and our results shows that FDI and CO2 emission are also directly related. Meanwhile for the trade openness the results are mixed, in start it rises CO2 emission but after sometimes it reduces. Moreover, due to shift of renewable energy consumption from fossil fuel helps to emit less CO2 and MSCI shows directly relation with CO2 emission for these countries. The findings support a notable long-run equilibrium link between the variables in all of the panels. Also, according to the long-run elasticities, FDI considerably lowers CO2 emissions in both the complete sample and emerging economies, while stock market growth declines in developed economies. Similar to how using renewable energy significantly lowers CO2 emissions and boosts economic output globally panels. Our conclusions have significant policy ramifications. In order to meet the rising demand for energy by displacing the usage of conventional energy sources like coal, gas, and oil, policymakers must first implement effective policies to promote renewable energy sources. As a result, both the CO2 emissions and the promotion of sustainable economic growth in the G20 nations will be aided. Also, according to the long-run elasticities, FDI considerably lowers CO2 emissions in both the complete sample and emerging economies, while stock market growth declines in developed economies.
Climate change represents a severe threat not only to natural habitats but also to humankind in recent decades. Considering this, the underlying reasons for climate change have been extensively studied in the literature. It has been found that there is a positive relationship between economic activities and environmental degradation. As an essential component of economic activities, the effect of foreign direct investment (FDI) on environmental quality is a subject that has recently attracted researchers' attention. The existing studies focus on the impact of overall FDI inflows on environmental destruction; there are no studies considering the effect of FDI inflows in specific sectors on environmental quality. Within this context, the purpose of this study is to fill the gap and contribute to the literature by examining the effect of FDI flows into the primary, manufacturing, and service sectors on environmental degradation. This will be achieved by employing the Autoregressive Distributed Lag (ARDL) model over the period 1992-2018 in Türkiye. The outcomes of the study indicate that FDI flows in the service sector have a positive effect on environmental quality in both the short and long run in Türkiye. On the other hand, FDI in the manufacturing sector contributes to environmental degradation in both terms. Similarly, FDI flows into the primary sector have a reverse effect on environmental quality, but a significant effect in the short run has not been observed. Furthermore, this study also examines if there is a U-shaped relationship between income and the load capacity factor, termed the Load Capacity Curve (LCC) hypothesis. The results demonstrate that the validity of the LCC hypothesis is confirmed in Türkiye.
p>This study comprehensively examines the complex and contradictory relationship between economic development and environmental sustainability through the Human Development Index (HDI) and the Climate Change Performance Index (CCPI). The analysis reveals that countries with high levels of human development generally pursue a development model that is not environmentally sustainable, due to high carbon emissions and intensive natural resource consumption. In contrast, some economically less developed countries show more positive results in terms of environmental indicators; however, they also face fundamental structural challenges in terms of social and economic welfare. This situation emphasizes that the relationship between economic and social development and environmental sustainability is not linear and one-directional; on the contrary, it varies depending on structural and regional factors. In this differentiation, the nature of economic growth plays a critical role: while growth supported by renewable energy sources and sustainable production models positively affects environmental performance, growth models based on unsustainable resources such as fossil fuels seriously threaten environmental sustainability. In this context, attention is drawn to the inconsistency between current global climate targets and the policies being implemented, and the ongoing significant shortcomings in countries emission reduction and renewable energy transition policies are highlighted. It is especially emphasized that developed countries, with their high carbon footprints and excessive resource consumption, are pushing the planet's ecological boundaries. Therefore, it is stated that for sustainable development to be achieved, countries must not remain limited to policy discourse but must transform these into effective and concrete practices.
JEL: Q01, Q48, Q58, O15, O44
Bu çalışma, ekonomik kalkınma ile çevresel sürdürülebilirlik arasındaki karmaşık ve çelişkili ilişkiyi, İnsani Gelişme Endeksi (İGE) ve İklim Değişikliği Performans Endeksi (İDPE) üzerinden kapsamlı bir şekilde incelemektedir. Analiz sonuçları, yüksek insani gelişmişlik düzeyine sahip ülkelerin genellikle yüksek karbon salımı ve yoğun doğal kaynak tüketimi nedeniyle çevresel açıdan sürdürülebilir olmayan bir kalkınma modeli izlediklerini ortaya koymaktadır. Buna karşın, ekonomik açıdan daha az gelişmiş bazı ülkeler çevresel göstergeler bakımından daha olumlu sonuçlar sergilemekle birlikte, sosyal ve ekonomik refah açısından yapısal sorunlarla karşı karşıyadır. Bu durum, ekonomik ve sosyal kalkınma ile çevresel sürdürülebilirlik arasındaki ilişkinin doğrusal ve tek yönlü olmadığını, aksine yapısal ve bölgesel faktörlere bağlı olarak değiştiğini göstermektedir. Bu farklılaşmada ekonomik büyümenin niteliği belirleyici bir rol oynamaktadır: yenilenebilir enerji kaynakları ve sürdürülebilir üretim modelleriyle desteklenen büyüme çevresel performansı olumlu yönde etkilerken, fosil yakıtlar gibi sürdürülemez kaynaklara dayalı büyüme modelleri çevresel sürdürülebilirliği ciddi şekilde tehdit etmektedir. Bu bağlamda, mevcut küresel iklim hedefleri ile uygulanan politikalar arasındaki tutarsızlığa dikkat çekilmekte ve ülkelerin emisyon azaltımı ve yenilenebilir enerjiye geçiş politikalarındaki önemli eksiklikleri vurgulanmaktadır. Özellikle gelişmiş ülkelerin yüksek karbon ayak izi ve aşırı kaynak tüketimiyle gezegenin ekolojik sınırlarını zorladığı ifade edilmektedir. Dolayısıyla, sürdürülebilir kalkınmanın sağlanabilmesi için ülkelerin politika söylemleriyle sınırlı kalmayıp bu söylemleri etkili ve somut uygulamalara dönüştürmeleri gerektiği belirtilmektedir.
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We focus on the role of double taxation treaties on environmental quality, to our knowledge the first empirical study to do so. Tax treaties are primarily implemented to remove double taxation, which helps promote international trade and investment. However, they are also aimed to address tax evasion and avoidance, which tends to have the opposite effect. As a result, the environmental impact is unclear. Specifically, we exploit the variation in the effective dates of the United States tax treaties with emerging and developing countries between 1990 to 2014 by applying difference-in-differences methods. We find that tax treaties significantly help reduce carbon dioxide emissions in emerging markets. This appears to be driven by the reduction in investments in pollution-intensive industries after tax treaty enactments. JEL Classifications: H3, H25, F18, F21
A feasible method for predicting carbon emissions may help in the development of a carbon minimization strategy, which is crucial in a CO2 constrained environment to avoid global warming. India is one of the growing economies that has led to higher carbon emissions as an effect of its reliance on fossil fuels. Keeping in this issue, this study is to suggest an improved machine learning method called Adaptive Neuro-Fuzzy Inference System-Snake Optimizer (ANFIS-SO) learning to predict and analyse the interactions between energy use, agriculture, land use, industrial processes, waste, and CO2 emissions in India. The proposed model is evaluated by using the database of Indian emissions data (World Bank database) from the year 2000 to the year 2021. The performance of the ANFIS-SO technique is compared to the ANFIS, ANFIS-CESBAS, and ANFIS-RSA models using known statistical benchmarks. From experimental results, the ANFIS-SO model outperforms other models with respect to the statistical benchmarks, such as mean absolute percentage error (0.0136), root mean squared error (0.0329), root mean square relative error (0.0183), mean absolute error (0.0209), and the determination coefficient (0.9919). Moreover, the trained ANFIS-SO model is used to estimate India's prospective CO2 emissions up to the year 2040. This proposed prediction model could be a powerful tool for the system for managing the atmosphere, which is very unstable, complicated, and non-linear. India can apply these prediction strategies to minimize carbon emissions to prevent a unified policy that restricts economic growth in impoverished areas.
Graphical Abstract
Natural disasters in Colombia related with climate fluctuations have high economic and social impacts, including the loss of human lives, infrastructure, agricultural production and livestock. Areal and riverine floods are the most common natural disasters in the country given its topography and heavy rainfall seasons. Flooding occurrences have increased during the last decades due the climate change and climate variability with prolonged periods with precipitation also affected by global phenomena as El Niño and La Niña. This research uses an Autoregressive Distributed Lag-Error Correction Model (ARDL-ECM) to describe the dynamics of meteorological variables, such as precipitation, relative humidity and air temperature, and their effects on floods in the Colombian Andean region by using monthly flood damage costs during the period from October 2006 to December 2023. The ARDL-ECM cointegration test indicates a statistically significant relationship among the meteorological variables analyzed and flood damage cost. With the estimated parameters for long and short-run effects, flood cost is projected for future decades using two climate change scenarios for meteorological variables. These simulations provide a perspective of the future impact of floods in the study region and allow discussion of current flood prevention and action policies to mitigate these results. The imminent increase of flood events under climate change found in this study provides even more evidence on the necessity of strengthening current efforts to reduce emissions and deforestation in Colombia.
The use of renewable energy is seen as the way forward toward meeting the goal of sustainable development and economic growth. Some of the notable renewable energies used include solar, biogas, wind, hydropower, and hybrid technologies. The use of renewable energy usage is advocated in several countries of the world, although there are some concerns about the negative impacts associated with the use of renewable energy. The concept of the bioeconomy is an evolving one with varying definitions, and the need for a sustainable bioeconomy across the world has continued to grow. Achieving sustainable development in the Global South has become a pressing concern, as the region is faced with challenges such as energy poverty, environmental degradation, and economic changes. Overall, the ideas discussed in the write-up provide a comprehensive overview of the current state of research on renewable energy technologies, while also identifying several avenues for future research and development in this rapidly evolving field. In conclusion, the literature reviewed highlights the importance of renewable energy in the bioeconomy, emphasizing its role in environmental preservation, economic growth, and sustainable development. Moving forward, future research should address the identified knowledge gaps to further advance our understanding of the multifaceted significance of renewable energy in the context of the bioeconomy. Also, innovation in this field is crucial to addressing energy challenges, reducing carbon emissions, and achieving sustainable development goals.
The convergence of climate change and economic instability has sparked an unprecedented surge in climate anxiety, emerging as a critical public health challenge of current era. Our study examines the relationship between economic policy uncertainty (EPU) and climate anxiety through both symmetric and asymmetric lenses, drawing on comprehensive panel data from G7 countries spanning 1999–2022. Through the development of a novel climate anxiety index and application of advanced panel techniques, we reveal robust evidence of EPU's substantial influence on climate anxiety. Our analysis demonstrates that this relationship intensifies at higher quantiles, while environmental performance metrics serve as crucial buffers against EPU's adverse mental health impacts. The bidirectional causality between EPU and climate anxiety emphasizes the urgent need for integrated economic and environmental policies to protect vulnerable populations' mental health in an increasingly uncertain world.
Finans sektörü enerji kaynaklarının yatırıma dönüştürülmesinde finansman sağlayıcı konumundadır. Son yıllarda finans sektörü içinde geleneksel bankacılığa alternatif olarak hızlı gelişim gösteren İslami bankacılık sektörü çevre dostu projelerin finansmanında önemli rol üstlenmektedir. Bu bağlamda, çalışmada çevresel kalite üzerinde İslami bankacılığın etkisinin yük faktörü eğrisi (LCC) hipotezi kapsamında araştırılması amaçlanmıştır. Bu doğrultuda kurulan araştırma modelinde bağımlı değişken olarak çevre kalitesi göstergesini ifade eden yük kapasitesi faktörü (LCF) kullanılmıştır. İslami bankacılık varlıkları, öz sermaye kârlılığı, yenilenebilir-yenilenemez enerji ile kişi başı reel gayri safi yurt içi hâsıla bağımsız değişkenler olarak modelde ele alınmıştır. Çalışma İslami bankacılık alanında önde gelen Türkiye, Birleşik Arap Emirlikleri, Kuveyt, Pakistan ve Endonezya ülkeleri üzerinde yapılmıştır. Beş ülkeye ait 2013-2022 arasındaki 10 yıllık veriler panel veri analizi ile incelenmiştir. Çalışma sonucunda LCC hipotezinin analiz edilen ülkeler için geçerli olduğu saptanmıştır. Yük kapasitesi faktörü üzerinde İslami bankacılık varlıklarının pozitif yönde etkisi olduğu ancak öz sermaye kârlılığının ise negatif yönlü bir etki oluşturduğu tespit edilmiştir. Öte yandan, analiz edilen ülkelerde yenilenebilir enerji ile yenilenemez enerji tüketiminin, yük kapasitesi faktörünü negatif yönde etkilediği ortaya koyulmuştur. Sonuç olarak, analiz edilen ülkelerde birincil enerji kaynakları yerine temiz enerji yatırımları için uygun maliyetle ve kolay erişimle daha fazla finansman sağlanarak yenilenebilir enerji kullanımının teşvik edilmesi ve yaygın hale getirilmesi gerekmektedir.
Yerba mate (Ilex paraguariensis A. St.-Hil.) is a legacy of the Guarani tradition that the peoples of Uruguay, Paraguay, Argentina, and Brazil have shared for centuries. It is usually consumed as a mildly stimulating drink called mate. However, numerous other applications exist, such as in the composition of pharmaceutical products, dyes, cosmetics, food, and beverages. It’s industrialization for producing yerba mate relies on relatively simple processes, of which little information is available related to sustainability. This work proposes evaluating the yerba mate processing industry’s environmental, social, and economic aspects. Thus, industries from southern Brazil—Rio Grande do Sul state—were interviewed and answered a questionnaire with indicators associated with the tripod of sustainability. The responses were applied to a mathematical model to calculate the sustainability index. As a result, it was found that the maximum degree of sustainability for the environmental scope was obtained in 40% of the industries interviewed. In contrast, in the economic scope, it was 25%, and in the social scope, 35% of the interviewed sectors. The global sustainability index was identified with a maximum degree for only 20% of the industries interviewed. These results show that there is still room for improvement and the need for interventions so that more industries achieve excellence. The results based on this system provide subsidies for adapting processes and certifying that production follows guidelines and other standardization aspects associated with sustainability, contributing to the UN Sustainable Development Goals (SDGs) and emphasizing the search for sustainable food production.
This article aims to investigate the existance of a possible dynamic link among economic growth, renewable energy consumption, environmental emissions, and CO2 across various countries from 2000 to 2019. By categorizing countries based on income levels, the research analyzes the interactions among variables such as CO2 emissions, foreign direct investments (FDI), labor force, industrial value-added, and gross capital formation. Employing a quantitative approach, several statistical methods were applied, including panel unit root examination, Pedroni cointegration analysis, VECM models (Vector Error Correction Model), and panel causality testing. Evidence of cointegration among the variables was found. The causality test showed causal relationships between the variables. The results obtained during this reserach could define preliminary premises for policymakers and stakeholders, as they underscore relevant and high determinant relationships between energy consumption, environmental factors, and economic development.The study underscores that while renewable energy is vital for sustainable development, its impact on economic growth being is influenced by various factors and policies.
Renewable energy consumption (REC) is viewed to be a core component for delivering sustainable economic growth. It is broadly acknowledged that REC can significantly contribute to lessening the burden of carbon emissions on the environment and fostering economic progress. Although foreign direct investments (FDI) are perceived as a key catalyst of REC growth, in some cases they can cause negative effects on REC. While there are many studies in the literature exploring the effects of FDI on variables such as economic growth, employment and foreign exchange deficits, the amount of studies examining the effect of the FDI on REC is very limited. The existing study attempts to fill this knowledge gap concerning the relationship between FDI and REC in Türkiye. This research investigates the long-run impact of FDI on RECs in Türkiye for the period 1973-2022 using the bootstrap Fourier ARDL technique. Empirical analysis reveals that FDI affects REC negatively, while GDP has no effect. The study's conclusions confirm the Pollution Haven Hypothesis (PHVH) in Türkiye, suggesting that the country has emerged as a desirable destination for businesses seeking to relocate their operations and evade the strict environmental regulations in their home countries.
The present research aims to address the empirical gap in understanding the impact of natural disasters on renewable energy consumption, specifically examining the role of foreign direct investment (FDI) and infrastructure. Panel data from 27 selected countries in Asia is utilized to explore the relationship between these variables using a two-step Generalized Method of Moments (GMM) approach. The dataset spans the period from 2010 to 2020, and secondary data from the World Bank and the Center for Research on the Epidemiology of Disasters (CRED) is employed. The study considers renewable energy consumption as the dependent variable, with lagged renewable energy, affected people, and infrastructure serving as independent variables. Additionally, gross domestic product per capita (GDPP) is included as a control variable to enhance data robustness. The findings of the research can be summarized in three main points. Firstly, the lagged renewable energy variable exhibits a positive and significant effect on renewable energy consumption. This suggests that the previous year’s renewable energy levels have a considerable influence on the subsequent year’s consumption, indicating the persistence of renewable energy usage. Secondly, an increase in infrastructure is found to have a statistically significant impact on renewable energy consumption in the selected Asian countries. This highlights the importance of developing and improving sustainable infrastructure to support the growth of renewable energy sectors. Lastly, the unexpected negative relationship between GDPP and renewable energy consumption suggests that middle-income countries may face challenges in adopting renewable energy due to insufficient technological advancements and infrastructure.
L’objectif – L’objectif de cette étude est d’analyser la relation entre les investissements directs étrangers (IDE), la transition énergétique et la pollution de l'environnement en Afrique subsaharienne sur la période 1985 à 2020. Conception/méthodologie/approche – Diverses approches économétriques ont été utilisées afin d’obtenir des résultats robustes. Le test de dépendance transversale a été effectué et les résultats ont confirmé la présence d'une dépendance transversale entre les variables, ce qui a permis l'utilisation du test de racine unitaire de seconde génération. L'analyse a été réalisée à l'aide de la méthode de Driscoll et Kraay, qui permet de traiter l'endogénéité, l'autocorrélation et l'hétéroscédasticité. Résultats : Les résultats montrent que l’hypothèse << pollutio haven>> est confirmée et que l’utilisation des énergies renouvelables qui mesure la transition énergétique diminue la pollution environnementale. Aussi l’éffet couplé des investissement direct à l étranger et les énergies renouvelable minimise la pollution de l environnement .La densité de la population, le commerce et le produit intérieur brut augmente la pollution de l'environnement. Originalité/valeur –Cette étude contribue à la littérature existant sur l’analyse de la relation entre investissement direct à l’étranger et la pollution de l’environnement ou énergies renouvelable et pollution de l’environnement en portant un regard particulier sur l’effet couplé de l’investissement direct à l’étranger et l’usage des énergies renouvelables sur la qualité de l’environnement. Nous pouvons suggérer à partir de ces résultats que d’ample efforts devraient être faits afin d'augmenter le taux d'investissement direct étranger dans les pays d'Afrique subsaharienne, en particulier l'attrait des technologies vertes qui peuvent aider à produire davantage d'énergies renouvelables.
There is a growing global concern about the challenges of sustainable development. Furthermore, these concerns are becoming increasingly prevalent in Bangladesh on a daily basis. This may be attributed to the escalating influx of remittances, the degradation of natural resources, and the potential adverse impacts of economic growth on the ecosystem. Thus, this research looks at how remittances (REM) and natural resources (NR) affect the ecological footprint (EFP) in Bangladesh by controlling economic growth (EG), renewable energy (REN), and urbanization (URB) from 1990 to 2021. The study utilizes the linear and non‐linear autoregressive distributed lag model to test the relationships between REM and NR on EFP. Positive and negative shocks to REM and NR have varied consequences on EFP, which suggests an asymmetric relationship. The findings reveal that the impact of the positive shock on NR is positive and significant. It implies that an increase in the positive shock of NR causes a rise in EFP. However, the impact of the negative shock on NR is negative but statistically insignificant. Likewise, negative shock in REM decreases the EFP by increasing ecological quality, while positive shock in REM does not significantly impact EFP. Similarly, REN and URB improve the environmental quality in Bangladesh while EG decreases. To meet sustainable development goals, policies can be designed for proficient and ecologically friendly types of energy.
Fossil fuels are primary sources for energy production. Increased dependence on fossil fuels has resulted in increased environmental issues demanding alternative sources. Bioenergy is becoming a popular alternative energy source due to its positive environmental impact and the availability of renewable sources. However, the availability of renewable energy sources in the energy sector currently contributes to about 14%. Biofuels are preferred due to its sustainability, eco‐friendly approach, and low‐cost raw materials, making it an efficient technique for energy production. This article provides the fundamental and applied concepts for on conversion processes of biomass to biofuels, such as combustion, pyrolysis, fermentation, gasification, and anaerobic digestion along with their role in the green economy. Different physical characteristics of biomass resources are important and contribute to determining their potential for producing biofuels. Herein, LCA, its techno‐economic importance, and the role of biomass in green economy are explained. Varying compositions and properties of different types of biomass resources, including lignocellulosic feedstocks, agriculture and forest residue, municipal solid waste, food waste, and animal manure as potential biomass resources, have been discussed. The article explains the strengths and weaknesses of different thermochemical conversion techniques and their current input toward scalar applications and commercialization.
The interplay between FDI inflows, energy consumption and environmental pollution stems from the pollution haven hypothesis (PHH). These relationships were examined by analysing panel data for 21 sub-Saharan African (SSA) countries from 1990-2016. More FDI inflows were found to worsen environmental pollution. However, when linked with relative income, more FDI inflows tended to lessen environmental pollution. Consequently, the existence of the PHH could not be unequivocally confirmed in SSA. The level of economic growth was also examined to assess the impact on environmental pollution. The validity of the Environmental Kuznets Curve (EKC) hypothesis was confirmed with an N-type relationship.
With the global population on the rise and the pressing challenges of energy crises and climate change, there is an ever-increasing need for innovative strategies to address these issues. Industrial cities play a pivotal role in these challenges, and prompt action is essential to mitigate their impacts. This research focuses on investigating Isfahan province, which serves as the industrial core of Iran and exhibits a substantial demand for electricity and natural gas. Currently, Iran relies solely on a national strategic energy plan for energy system development. This study aims to underscore the significance of formulating a comprehensive long-term urban energy plan tailored to regional resources. Such plans offer valuable insights to policymakers, aiding them in recognizing opportunities for energy system development and prioritizing infrastructure projects. To achieve this goal, an optimized energy planning process has been employed, targeting the reduction of both CO2 emissions and total costs in Isfahan by the year 2050. Key decision variables considered in this planning process include the sizing of solar plants, wind farms, biogas facilities, combined heat and power (CHP) plants, and the extent of district heating coverage. The excess heat generated by industrial processes is harnessed and distributed through the district heating network to support residential heating needs. The findings of this study reveal that an optimized strategy could result in substantial benefits. Specifically, it is projected that this strategy could lead to a reduction of 9 million metric tons of CO2 emissions compared to the basic strategy and save approximately 3.8 billion dollars in costs by 2050. Furthermore, the results emphasize that, despite being a relatively expensive solution, district heating has the potential to achieve significant savings in natural gas consumption.
With the continuous development of global economic and trade activities, environmental problems have become an important factor restricting the sustainable development of all countries. How to realize the coordinated development of international trade and environmental protection has become a major issue facing the international community. Since China joined the WTO, its share of international trade has been increasing continuously. In order to deeply analyze the influence of international carbon emission trading policy on domestic carbon emissions, we use an input–output model and a GTAP analysis method to theoretically calculate the carbon emissions of the international trade of various departments in Shandong Province. At the same time, the implicit carbon emission index of various industries in 2022 is calculated through the direct energy consumption coefficient. The results show that there are significant differences in the impact of the carbon tariff system on different industries. In terms of the carbon emission index, the food processing industry showed a decrease of 18.99 Mt, while the implied carbon emission of the tobacco, textile and leather manufacturing industry reached 30.56 Mt due to the continuous expansion of trade scale. In contrast, the implied carbon emission level of the metal product processing industry reached 5.3 Mt, while the carbon emission of traditional trading industries such as coal mining was almost unaffected by international trade, and its carbon emission index reached the highest level of 5.89 in 2020. In terms of trade impact, high-trade industries such as the food processing industry are significantly affected by the carbon tariff policy, and their share has dropped from 5.89% to 3.95% in the past decade. The carbon emissions generated by GDP growth established by the GTAP model are more convincing. This model can directly reflect the energy efficiency of a region from the side. Based on the present situation of international trade, this paper analyzes the inequality of the current carbon tariff system, and puts forward some policies to optimize the energy structure to reduce carbon emissions and expand domestic demand to reduce the dependence on international trade. Through the GTAP model, we put forward policy suggestions to optimize the energy structure to reduce carbon emissions and the dependence on international trade by expanding domestic demand.
The relationship between FDI inflows and carbon dioxide (CO2) emissions is still one of the most important topics among both environmentalists and economists. In this study, the Toda-Yamamoto-augmented Granger causality method is applied to analyze the relationship between FDI inflows and CO2 emissions by employing annual data from 1974 to 2011 to determine whether the pollution haven hypothesis is valid in Turkey. The results of the causality test indicated that FDI inflows and CO2 emissions have a short-run univariate causal relationship, with positive causality moving from CO2 emissions to FDI inflows. One direction effect of CO2 emissions on FDI inflows supports the pollution haven hypothesis in Turkey.
The Environmental Kuznets Curve hypothesis is a theoretical proposition explicating the link between a locality’s income level and environmental degradation. Previous studies estimated the current relationship with an unchanging parameter. However, due to changes in global conomic and political conditions, natural disasters, technological shocks, and implemented policies, the link between income and environmental degradation is about to change. The study investigates the income-pollution nexus for G7 countries—Canada, France, Germany, Italy, Japan, the UK, and the USA—from 1970 to 2014 using a novel methodology: bootstrap panel rolling window causality. In this context, this approach is advantageous for determining the link between income and pollution level in sub-sample periods, rather than assuming an unchanging parameter, and captures the hidden causal linkages between income and environmental pollution. The results confirm the validity of the EKC hypothesis in Japan and the USA, whereas in the other countries, the relationship between EF and GDP exhibits no evidence for an inverted U-shaped pattern.
This study examines the nonlinear relationship between foreign direct investment (FDI) and the ecological footprint (EF), trying to confirm the pollution haven hypothesis (PHH). We use a panel data model for MINT (Mexico, Indonesia, Nigeria, and Turkey) countries in the period 1990–2013 and an empirical framework based on the pollution haven hypothesis (PHH). Using the fully modified least squares (FMOLS) and dynamic ordinary least squares (DOLS) econometric methodologies, the empirical results confirm an inverted-U relationship between FDI and the ecological footprint. To reinforce our analysis, we check the connection between economic growth and the ecological footprint, validating the environmental Kuznets curve (EKC) hypothesis for MINT countries. Finally, we also confirm a negative connection between renewable energy use, the urbanization process, and the changes in the ecological footprint. These findings offer a series of useful recommendations for policymakers, where the promotion of clean industries and energy-efficiency actions are essential for reducing environmental damage in MINT countries. We highlight the viability of the ecological footprint as a first-order environmental indicator whose evolution is determined by demographic fluctuations.
This study estimated unbalanced panel data analysis to investigate the relationship among CO2 emissions, GDP, renewable and non-renewable energy utilization, and foreign direct investment (FDI) inflow in 26 European countries. Moreover, we investigated the role of environmental regulations in validation of the pollution haven hypothesis (PHH) in two EU country groups, namely 1–4th and 5th enlargement countries of EU, since their adaptation periods of environmental legislation may indicate differences. Empirical results confirmed the validation of environmental Kuznets curve (EKC) hypothesis and PHH for overall EU countries. However, results differ between country groups in EU. For example, while results confirm the evidence of EKC in 5th enlargement countries, they do not support in 1–4th enlargement countries. Moreover, while environmental regulations do not play an important role in the validity of PHH, they are important factors in the validity of EKC in overall EU countries. Granger causalities showed that economic growth causes energy consumption and FDI inflow. Since renewable energy mitigates the emissions, EU countries should enhance green technology and energy efficiency to ensure sustainable development. What is more, EU countries need to tighten the environmental regulations on FDI inflow. Therefore, our results support the new framework by European Commission on screening the FDI inflows throughout the EU zone.
The study revisits the position of the environmental Kuznets curve (EKC) hypothesis in India by incorporating the role of energy consumption and democratic regime in the environmental degradation function for the period 1971–2014. Employing Zivot–Andrews nonstationarity test, Bayer–Hanck cointegration test, autoregressive distributed lag (ARDL) model, and vector autoregressive model (VECM) Granger causality test, the results found the integration order of I(1) and a stable cointegration among the series. The result validates the EKC hypothesis for India and further divulges that while energy consumption increases environmental degradation both in the long run and short run; the effect of democracy in reducing environmental degradation is weak (statistically insignificant) in the long run but strong (statistically significant) in the short run. The finding from the VECM Granger causality test indicates a long-run causality between the fundamental variables and environmental degradation. Furthermore, the results of the short run show a unidirectional Granger causality running from energy consumption to environmental degradation, energy consumption to real income, and energy consumption to square of real income. Therefore, our findings suggest that energy conservation policy should be prioritized towards harnessing energy from clean sources to mitigate environmental degradation and spur economic growth.
The goals of this paper are to examine whether the environmental Kuznets curve (EKC) holds and to investigate whether renewable energy consumption can decrease CO2 emissions in the USA using monthly data spanning the period 2000:M01–2018:M07. For these purposes, the paper employs a cointegration test with a regime shift and observes the long-run coefficients before and after the regime shift. The findings support the presence of the EKC. The findings also indicate that renewable energy consumption has negative effects on CO2 emissions, while these effects are greater when the share of renewable energy consumption in total energy consumption is higher in the USA. Theoretical and practical implications for these findings are discussed.
In this study, the environmental Kuznets curve (EKC) hypothesis is examined for 3 developed countries, which are Denmark, the United Kingdom, and Spain, for the period between 1960 and 2014. The EKC hypothesis is examined under 2 nexuses which are GDP, CO2 and energy consumption, and GDP, CO2, energy consumption and the square of GDP. Causal and long-term relationships between GDP, CO2, and energy consumption are examined for these 3 developed countries using the ARDL bounds test, the Toda and Yamamoto Granger non-causality test, the VAR Granger Causality/Block Exogeneity Wald test, and the Johansen cointegration test. Long-term relationships between GDP, CO2, energy consumption, and the square of GDP are examined by the Johansen cointegration test. The EKC hypothesis is not confirmed for Denmark, the United Kingdom, and Spain, and the neutrality hypothesis is confirmed for these 3 developed countries. Unidirectional causality running from energy consumption to CO2 is found for Denmark, and unidirectional causality running from CO2 to energy consumption is found for the United Kingdom.
The role of energy cannot be passed over in the process of economic growth and development in any economy. China consumes colossal quantity of energy; thus, the central objectives of this study is to empirically evaluate the linkages among energy use, environment by CO2 emissions, human health by health expenditures, Foreign Direct Investment (FDI) inflows, and real GDP per capita used for economic growth over the period of 1995–2016 for China. The nature of the data directed to employ the Canonical cointegrating regression (CCR) method for unknown parameter estimation. Four equations have estimated namely for FDI, health, environment, and economic growth. The result for China during the period under the study reveals that energy consumption has significant positive impact on FDI, health, environment, and economic growth. The study results suggest that policy makers need to chalk out effective policy for effective utilization of energy so as to encourage permissible economic growth and development in China.
The study explores the impacts of renewable energy, environmental patents, economic growth and other variables on the CO2 emission per capita from 2000 to 2013 for the BRIICS countries. Using both the panel OLS methods and panel quantile regression method, we find that the effects of the determinant variables are heterogeneous across quantiles. Specifically, renewable energy supply reduces CO2 emissions per capita, with the strongest effect at the 95th quantile. Development of environmental patents accelerates carbon emissions per capita, but only significantly affects the CO2 emissions per capita at the upper tail of the conditional distribution. GDP per capita enhances CO2 emissions per capita, with the most substantial effect in the 5th quantile. Exports increase carbon emissions per capita with an asymmetric inverted U-sharped impact. Foreign direct investment reduces carbon emissions per capita, but only significantly influences the carbon emissions per capita at the medium and upper of the conditional distribution. Domestic credit to private sectors raises carbon emissions per capita with gradually decreasing impacts along all quantiles. We propose several policy recommendations based on the results.
The relationship between renewable energy consumption (REC), foreign direct investment (FDI) inflows, economic growth, and their resulting impact on CO2 emissions is widely discussed area in energy and environmental literature; however, there is an unseen literature on moderation and mediation effect of per capita income and FDI inflows with the renewable energy consumption on CO2 emissions in developing countries like Pakistan, which is being evaluated in this study by using a consistent time series data for a period of 1975–2016. The results show that economic growth and FDI inflows both increase CO2 emissions, while REC substantially decreases CO2 emissions during the study time period. The results do not support the inverted U-shaped Environmental Kuznets Curve (EKC) hypothesis for per capita income (and FDI inflows) and per capita CO2 emissions in a country. The results supported ‘pollution haven hypothesis’ where FDI inflows damage the natural flora of the country. By inclusion of moderation and mediation effect of per capita income and FDI inflows with the REC on CO2 emissions averted the positive impact of REC, and converted into negative externality, where environmental sustainability agenda is compromised by lower environmental regulations and unsustainable production techniques that increase country’s economic growth. The study concludes that by adding REC in existing energy portfolio may help to reduce CO2 emissions while strict environmental compliance may disregard the negative externality of unsustainable production and it will support to achieve green development programmes in a country.
Low carbon energy transitions are important to mitigate climate change, reduce air pollution, and reduce fossil fuel resource depletion. The Nordic countries (Denmark, Finland, Iceland, Norway, Sweden) are seen as leaders in low carbon energy transitions. This paper provides a comparative data analysis of low carbon energy transitions in the Nordic countries from the 1960s to 2015, and assesses evidence of the Environmental Kuznets Curve (EKC). The paper finds that the EKC has been observed in Denmark, Iceland, and Sweden in terms of total CO2 emissions, but not in Norway and Finland. For per capita CO2 emissions, there is evidence for the EKC in Denmark, Finland, Iceland, and Sweden, but not for Norway. For energy use per capita, the EKC is only observed for Denmark, while improvements are needed for the other countries. Norway is an outlier, in comparison with the other Nordic countries, hence the country should implement more stringent climate change mitigation policies to reduce its emissions. Overall, the research suggests that the Nordic countries, particularly Denmark, Iceland, and Sweden, can provide valuable lessons for national, regional, and global low carbon energy transitions.
Prior research address socio-economic aspects of tourism industry and little attention has been paid to investigate the impact of tourism development on economic growth, and environmental quality. Accordingly, this study examines the impact of tourism development on economic growth, CO2 emissions and environmental quality in Tunisia, Egypt and Morocco (Muslim majority countries). An autoregressive distributed lag model is used to analyze data for the period 1980–2014. The study further examines the long and short-term relationship between tourism and economic growth; and tourism and environmental quality. The study reveals that economic growth converges to its long-run equilibrium at an adjusting speed of about 25.7% in Morocco, 5.8% in Egypt, and 2.1% in Tunisia. The findings of the study confirm that tourism growth is linked to environmental quality. The study reveals that tourism has a negative effect on the environment quality in Egypt whereas a positive effect in Tunisia and neutral in Morocco. Using the EKC hypothesis tests, the study concludes the existence of an inverted U-shaped relationship between CO2 emissions and the level of income for Morocco and Egypt, whereas for Tunisia, this relationship is U-shaped. The study also offers policy implications. © 2018 Springer Science+Business Media B.V., part of Springer Nature
Pollution haven hypothesis (PHH), which is defined as foreign direct investment inducing a raising impact on the pollution level in the hosting country, is lately a subject of discussion in the field of economics. This study, within the scope of related discussion, aims to look into the potential impact of foreign direct investments on CO2 emission in Turkey in 1974–2013 period using environmental Kuznets curve (EKC) model. For this purpose, Maki (Econ Model 29(5):2011–2015, 2012) structural break cointegration test, Stock and Watson (Econometrica 61:783–820, 1993) dynamic ordinary least square estimator (DOLS), and Hacker and Hatemi-J (J Econ Stud 39(2):144–160, 2012) bootstrap test for causality method are used. Research results indicate the existence of a long-term balance relationship between FDI, economic growth, energy usage, and CO2 emission. As per this relationship, in Turkey, (1) the potential impact of FDI on CO2 emission is positive. This result shows that PHH is valid in Turkey. (2) Moreover, this is not a one-way relationship; the changes in CO2 emission also affect FDI entries. (3) The results also provide evidence for the existence of the EKC hypothesis in Turkey. Within the frame of related findings, the study concludes several polities and presents various suggestions.
This study reanalyzes the determinants of the CO2 emissions in France. For this purpose, it considers the unit root test with two structural breaks and a dynamic ordinary least squares estimation. The paper also considers the effects of energy consumption and the economic complexity on CO2 emissions. First, it is observed that the EKC hypothesis is valid in France. Second, the positive effect of the energy consumption on CO2 emissions is obtained. Third, it is observed that a higher economic complexity suppresses CO2 emissions in the long run. The findings imply noteworthy environmental policy implications to decrease the level of CO2 emissions in France.
Using a long dataset and some recently popularized nonparametric econometric techniques, this study revisits the nexus between economic growth and carbon dioxide (CO2) emissions for the G7 countries over nearly two centuries. The use of nonparametric modelling is warranted by the fact that long historical time series are often subject to structural breaks and other forms of nonlinearity over the course of time. We employ nonparametric cointegration and causality tests along with the cross-validated Local Linear regression analysis and validate the existence of the environmental Kuznets curve in six of the G7 countries – Canada, France, Germany, Italy, U.K. and the U.S. – and the only exception is Japan. Our empirical analysis also finds CO2 emissions and economic growth to be cointegrated and closely interrelated in the Granger sense. Our results are robust and highlight the nonlinear causal relationship between the two variables.
The study investigates the direction of causal relationships among emissions, energy consumption and economic growth in Nigeria using annual time series data for the period 1970-2013. The Johansen maximum likelihood cointegration tests indicate an existence of a unique cointegrating vector, and the normalized long run estimates shows that fossil fuel enhances carbon emissions whereas, clean energy source (electricity) mitigate the atmospheric concentration of carbon dioxide (CO2) emissions. Similarly, the Wald exogeneity Granger causality test indicates an existence of unidirectional causation running from fossil fuel to CO2 emissions and gross domestic product (GDP) per capita. Alternatively, non-fossil energy (electric power) causes more proportionate change in GDP per capita but our result could not establish any causal link between electric power and carbon emissions. Finally, charting a channel towards ensuring sustainable environment and economic development involves a progressive substitutability of clean energy sources for fossil consumption.
This study examines the impact of foreign direct investment (FDI) and the potential of renewable energy consumption on carbon dioxide (CO2) emissions in 21 Kyoto countries using an unbalanced panel data. For this purpose, Environmental Kuznets Curve (EKC) hypothesis was tested using panel cointegration analysis. Panel causality tests show that there are significant long-run causalities from the variables to carbon emissions, renewable energy consumption, fossil fuel energy consumption and inflow foreign direct investments. The results of our model support the pollution haloes hypothesis which states that FDI brings in clean technology and improves the environmental standards. However, an inverted U-shaped relationship (EKC) was not supported by the estimated model for the 21 Kyoto countries. This means that economic growth cannot ensure environmental protection itself or environmental goals cannot await economic growth. Another important finding is that renewable energy consumption decreases carbon emissions. Based on the empirical results, some important policy implications emerge. Kyoto countries should stimulate the FDI inflows and usage of renewable energy consumption to mitigate the air pollution and meet the emission targets. This paper provides new insights into environment and energy policies through FDI inclusion.
This study investigates the impact of foreign direct investment (FDI), economic growth and energy consumption on carbon emissions in five selected member countries in the Association of South East Asian Nations (ASEAN-5), including Indonesia, Malaysia, the Philippines, Singapore and Thailand. This paper employs a panel quantile regression model that takes unobserved individual heterogeneity and distributional heterogeneity into consideration. Moreover, to avoid an omitted variable bias, certain related control variables are included in our model. Our empirical results show that the effect of the independent variables on carbon emissions is heterogeneous across quantiles. Specifically, the effect of FDI on carbon emissions is negative, except at the 5th quantile, and becomes significant at higher quantiles. Energy consumption increases carbon emissions, with the strongest effects occurring at higher quantiles. Among the high-emissions countries, greater economic growth and population size appear to reduce emissions. The results of the study also support the validity of the halo effect hypothesis in higher-emissions countries. However, we find little evidence in support of an inverted U-shaped curve in the ASEAN-5 countries. In addition, a higher level of trade openness can mitigate the increase in carbon emissions, especially in low- and high-emissions nations. Finally, the results of the study also provide policymakers with important policy recommendations.
The aim of this study is to search for a better optimization algorithm in applying unit root tests that inherit nonlinear models in the testing process. The algorithms analyzed include Broyden, Fletcher, Goldfarb and Shanno (BFGS), Gauss–Jordan, Simplex, Genetic, sequential quadratic programming and extensive grid-search. The simulation results indicate that the derivative free methods, such as Genetic and Simplex, have advantages over hill climbing methods, such as BFGS and Gauss–Jordan, in obtaining accurate critical values for the Leybourne et al. (J Time Ser Anal 19:83–97, 1998) (LNV) and Sollis (J Time Ser Anal 25:409–417, 2004) unit root tests. Besides, we extend our analysis by including exponential smooth transition type of trend function in to unit root testing which is not used in the previous literature. The same result also holds true for our newly proposed unit root test with exponential smooth transition function type of trend model. Furthermore, we realize that there is a gap in the unit root studies that the newly proposed tests are not analyzed between each other’s data generating process (DGP). Hence, we investigate the power comparison of different nonlinear unit root test under various DGP including nonlinear unit root tests and find interesting results such as LNV type unit root test can manage to capture state dependent nonlinearity when the transition speed is high. Finally, we have used the Australian real interest rate parity hypothesis to empirically verify the results that we have obtained in the simulation studies.
This study uses the Group of Twenty (G20) as a representative sample of global economic development. Within a panel Emissions–Energy–Output (EEO) framework over the period 1991–2016, to estimate the Carbon Kuznets Curve (CKC), the clean/fossil fuels energy consumption (CE/FF) elasticity of demand for carbon emissions, the causalities between emissions, energy, and economy, and thus to propose strategy for decoupling environmental pressure from economic growth (EG). The results of the descriptive statistical analysis suggest an absolute decoupling effect seems to have occurred with the drop in related environmental pressure and the continuation of economic growth. The panel cointegration test results show that there is a long-run equilibrium relationship between carbon emissions, FF, real GDP, and different types of CE [i.e., new renewable (Ren)/hydropower (Hydro)/nuclear (Nuc)]. The estimation results show that the CKC exists, and emissions are positively elastic to FF and negatively inelastic to Ren/Hydro/Nuc, although Ren's average per capita compound annual growth rate reached 14%. The results of panel vector error correction models reveal that 1) the use of nuclear energy is a key means for dealing with carbon emissions; 2) the substitutability/symbiosis exists between Ren/Hydro and FF; 3) the feedback hypothesis between EG and FF/Ren and the Hydro/Nuc-led growth hypothesis are confirmed. Therefore, energy-saving policies may hurt EG. A broad strategy for emissions, energy consumption, and economy decoupling are to support diversified, sustainable energy consumption mix (including SHP, Ren, and Nuc) and maintain stable economic growth, thereby improving energy efficiency and safety, reducing carbon dioxide intensity, and thus leading the world to absolute decoupling. Absolute decoupling is the only way to achieve a truly sustainable future.
This study examines the association between foreign direct investment (FDI) and carbon emissions for the Middle East and North African (MENA) region in 1990–2015, including biomass energy consumption as an additional determinant of carbon emissions. We apply the generalized method of moments (GMM) to validate the existence of the pollution haven hypothesis (PHH). The N-shaped association is also validated between FDI and carbon emissions. The link between economic growth and carbon emissions is inverted-U and N-shaped; that is, it satisfies the environmental Kuznets curve (EKC) hypotheses. Biomass energy use lowers carbon emissions, and the causality analysis reveals that FDI causes CO 2 emissions. Clearly, the results confirm the existence of a feedback effect between economic growth and carbon emissions. The connection between biomass energy use and CO 2 emissions is also bidirectional. The empirical findings suggest policy makers to design comprehensive trade and energy policies by targeting the cleaner production practices, for not only to ensure environmental sustainability, but also to fulfil the objectives of sustainable development goals.
During the last two decades, the relationship between macroeconomic variables and environmental pollution has been studied extensively. Moreover, the Environmental Kuznets Curve (EKC) hypothesis and the Pollution Haven Hypothesis (PHH) have been tested in numerous countries. However, the number of empirical studies focusing on testing these two hypotheses for MENA (Middle East and North Africa) countries is limited and cross-sectional and/or time series methods were mainly utilized while the number of studies using panel econometric methodology is quite scant. By using balanced panel data methodology, this study aims to investigate the links and direction of causality between per capita income, foreign direct investment, energy use and carbon dioxide emission for MENA countries for the period of 1980–2013. This study finds partial support for both the EKC and the PHH for MENA countries. Furthermore, the empirical results show that foreign direct investment inflows and energy use have exacerbated pollution in the majority of MENA countries.
Purpose
The purpose of this paper is to provide a survey of the empirical literature on environmental Kuznets curve (EKC) estimation of carbon dioxide (CO 2 ) emissions over the period of 1991–2017.
Design/methodology/approach
This survey categorizes the studies on the basis of power of income in empirical models of EKC. It has been hypothesized that the EKC shows an inverted U-shaped association between economic growth and CO 2 emissions.
Findings
For all the contexts, the results of EKC estimation for CO 2 emissions are inconclusive in nature. The reasons behind this discrepancy can be attributed to the choice of contexts, time period, explanatory variables, and methodological adaptation.
Research limitations/implications
The future studies in this context should not only consider new set of variables (e.g. corruption index, social indicators, political scenario, energy research and development expenditures, foreign capital inflows, happiness, population education structure, public investment toward alternate energy exploration, etc.), but also the data set should be refined, so that the EKC estimation issues raised by Stern (2004) can be addressed.
Originality/value
By far, no study in the literature of ecological economics has focused on the empirical estimation of EKC for CO 2 emissions. This particular context has been used for this study, as CO 2 is one of the highest studied pollutants in the ecological economics, and especially within the EKC hypothesis framework.
An augmented autoregressive distributed lag (ARDL) bounds test for cointegration involves an extra F-test on the lagged levels of the independent variable(s) in the ARDL equation. Originally, this testing strategy was introduced using the bootstrap procedure. This paper provides both the small sample and asymptotic critical values for easier implementation of the test, making it applicable for a broader range of researchers. Two advantages of this augmented ARDL bounds test are that the assumption of an I(1) dependent variable is not necessary, and a clear conclusion on the cointegration status is provided by the three tests. The augmented ARDL bounds test is demonstrated using an empirical study on government taxation and expenditures. The tests support the tax-and-spend hypothesis of the budgetary policy for the US, the UK, and France.
Climate change has become a global phenomenon due to its threat to sustainable development. However, economic development plays a complementary role in both climate change and sustainability. Thus, the environmental Kuznets curve hypothesis is critical to climate change policy formulation and development strategies. Accordingly, this study examined the validity of environmental Kuznets curve hypothesis by investigating the relationship between economic growth, energy consumption, financial development, and ecological footprint for the period from 1977 to 2013 in 11 newly industrialized countries. For this purpose, the study employed both augmented mean group (AMG) estimator and heterogeneous panel causality method which are suitable for dependent and heterogeneous panels. The results of the estimator show that there is an inverted U-shaped relationship between economic growth and ecological footprint. According to the causality test results, it is concluded that there is bi-directional causality between economic growth and ecological footprint.
Ecological Kuznets curve (EKC) reveals the relationship between GHG emissions and economic growth. However, there are other factors and different channels through which the economic growth affects environmental quality. Therefore, we aim to examine not only direct (scale) impact of previously analysed factors, such as GDP, trade, foreign direct investment (FDI), urbanization, industrialization, renewable energy consumption, and energy efficiency on GHG emissions, but also to model composition and technique effects of this impact. Proposed models were tested using the panel data of 147 countries between 1990 and 2012 and system GMM estimator. Estimation results provided an evidence of GDP's positive and significant impact on GHG emissions and no evidence of scale effect of urbanization and FDI on GHG emissions. Moreover, we found statistical evidence of negative correlation between trade and GHG emissions and this contradicts to the leakage effect. Furthermore, our estimations did not reveal the composition effect for all analysed factors. In case of technique effect, the results showed that GDP, urbanization, and trade contributed to reducing carbon emissions only via energy efficiency but not via renewable energy. Therefore, countries should further seek that economic growth would be accompanied by technological development and faster growth of energy efficiency.
This paper explores the determinants of carbon emissions in France by accounting for the significant role played by foreign direct investment (FDI), financial development, economic growth, energy consumption and energy research innovations in influencing CO2 emissions function. In this endeavour, we employ the novel SOR (Shahbaz et al. 2017) unit root test on French time series data over the period 1955–2016 to examine the order of integration in the presence of sharp and smooth structural breaks in the variables. We also apply the bootstrapping bounds testing approach, recently developed by McNown et al. (2018), to investigate the presence of cointegration and the empirical findings underscore the presence of cointegration among the time series. Moreover, we find that FDI has a positive impact, while energy research innovations have a negative impact, on French carbon emissions. Financial development lowers carbon emissions, thereby improving the French environmental quality. FDI degrades the environment, and thus supports the pollution-haven hypothesis in France. Similarly, financial development suggests that financial stability is a required condition for improving environmental quality, so are energy research innovations. Contrarily, energy consumption is positively linked with carbon emissions. However, the relationship between economic growth and CO2 emissions is an inverted-U, which is a validation of the environmental Kuznets curve (EKC).
In accordance with the Sustainable Development Goal 17 of improving global partnership for sustainable development, this study examined the effect of foreign direct investment inflows, economic development, and energy consumption on greenhouse gas emissions from 1982 to 2016 for the top five emitters of greenhouse gas emissions from fuel combustion in the developing countries, namely; China, India, Iran, Indonesia and South Africa. The study employed a panel data regression with Driscoll-Kraay standard errors, U test estimation approach and panel quantile regression with non-additive fixed-effects. The study found a strong positive effect of energy consumption on greenhouse gas emissions and confirmed the validity of the pollution haven hypothesis. The environmental Kuznets curve hypothesis is valid for China and Indonesia at a turning point of US 2999; second, a U-shape relationship is valid for India and South Africa at a turning point of US 7573. Foreign direct investment inflows with clean technological transfer and improvement in labour and environmental management practices will help developing countries to achieve the sustainable development goals. Mitigation of greenhouse gas emissions depends on enhanced energy efficiency, adoption of clean and modern energy technologies, such as renewable energy, nuclear, and the utilization of carbon capture and storage for fossil fuel and biomass energy generation processes.
The purpose of this paper is to investigate the dynamic long run relationship between CO 2 emissions, economic growth, financial development, trade openness, industrialization, urbanization, coal and noncarbohydrate energy consumption within the framework of environmental Kuznets curve (EKC) for Turkey over the period 1971-2014. The two main contributions of this study are that the EKC hypothesis has been examined by separating trade openness and final energy consumption into import-export and coal-noncarbohydrate energy consumption respectively. The findings of the autoregressive disturbed lag bounds testing approach showed that economic growth, coal consumption, financial development, import, industrialization and urbanization had a positive impact on CO 2 emissions, while export and noncarbohydrate energy consumption decreased CO 2 emission in the long run. Moreover, the study supported the EKC hypothesis, which suggests an inverted U-shaped relationship between per capita income and CO 2 emissions. The turning point obtained from long run regression was found to be approximately $14360 that outside of the sample period. Finally, these important findings indicate that noncarbohydrate energy consumption and export can be a solution to reduce environmental pollution, and Turkey's CO 2 emissions will begin to decline when the country reaches the per capita income level at the turning point in the coming years.
To investigate the nexus among clean energy consumption, economic growth and CO2 emissions, a newly developed bootstrap ARDL bounds test with structural breaks is employed to survey the cointegration and causality for G7 countries. We find no cointegration among real GDP per capita, clean energy consumption and CO2 emissions in Canada, France, Italy, the US and the UK. However, cointegration exists in Germany when real GDP per capita and CO2 emissions serve as dependent variables and in Japan when CO2 emissions is the dependent variable. Regarding the results of causality test that we find clean energy consumption causes real GDP per capita for Canada, Germany and the US and CO2 emissions causes clean energy consumption for Germany. Besides, we find feedbacks between clean energy consumption and CO2 emissions for Germany, and unidirectional causality running from clean energy consumption to CO2 emissions for the US. Our study has important policy implications for G7 countries conducting efficient energy-use strategy to reduce CO2 emissions.
This study empirically examine the effects of foreign direct investment inflows and energy consumption on environmental pollution in the GCC from 1990 to 2014. The study employed the Pooled Mean Group (PMG) methodology. The findings of the study discovered FDI inflows to have negative impact on the environment while energy consumption was detected to have positive impact and both were found to be statistically significant in explaining the extent of carbon emissions in the region. Additionally, higher disposable income, domestic investment, and FDI were detected to have significant influence on energy use in the GCC. The study also discovered how higher disposable income and FDI helps in improving environmental quality in the GCC. While energy use through domestic investment reduces it. Furthermore, relative income negatively impacts the environment through FDI. Our results did not support the idea that the selected GCC countries are pollution haven. The study conclude that for these countries to enjoy perpetual benefits of pollution free states, there is the need to prioritize full scale production of efficient, sufficient and sustainable green energy and ensure optimum energy mix management. This will reduce the level of CO 2 emission as a result of heavy energy consumption of these countries as discovered by the study.
We propose a bootstrap autoregressive-distributed lag (ARDL) test. By applying the appropriate bootstrap method, some weaknesses underlying the Pesaran, Shin and Smith ARDL bounds test are addressed including size and power properties and the elimination of inconclusive inferences. In addition, inferences based solely on the significance of the F-test and single t-test from the ARDL bounds test are not sufficient to avoid degenerate cases. The bootstrap ARDL test provides an additional test on the significance of coefficients on lagged levels of the regressors, which provides a better insight into the cointegration status of the model.
Fixed asset investment (FAI) and foreign indirect investment (FDI) have important influences on economic development and environmental quality. Because environmental performance is related with economic development, FAI and FDI may affect environment indirectly through their impacts on economic growth. In this study, the direct and indirect effects of both FAI and FDI on China's environmental quality are distinguished and separately estimated for the first time with a carefully designed framework of a two-equation model. Because most economic activities and environmental pollutions occur in the urban areas, a panel data of 112 Chinese cities for the period 2002–2015 is utilized. Several spatial factors are also introduced to control for the potential spatial correlations in economic development and pollutant emissions. The estimation results indicate that there exist apparent differences in the environmental effects of FAI and FDI. The direct effects of FAI on SO2 emissions are significant positive and dominate the negative indirect effects. By contrast, the direct, indirect and total effects of FDI on pollutant emissions are all negative. Therefore, overall speaking, well designed and targeted policies should be formulated to reduce the negative environmental impacts of FAI and to increase the positive influences of FDI on environment.
This paper examines whether there is a long-run relationship among foreign direct investment (FDI), exports, and gross domestic product (GDP) in selected Asian economies. We use a newly developed cointegration test, the bootstrap autoregressive distributed lag (ARDL), to examine this long-run relationship. The motivation for using the bootstrap methodology is to generate and apply critical values for the ARDL test that are valid and appropriate for the specific data sets used. Further, the bootstrap tests allow for endogeneity and feedback that may exist. Pesaran et al. (2001)Pesaran, Shin, and Smith, 2001 highlighted the possibility of degenerate cases, but empirical studies in general ignore these and may conclude that cointegration exists when it does not. Our tests fail to find evidence of cointegration when GDP is the dependent variable. The absence of a long-run forcing relation from FDI and exports to GDP implies that FDI and exports were not the sole sources of economic growth in our selected Asian economies.
This study probes cointegration among carbon dioxide (CO2) emissions, economic activity, energy use, and trade, and examines the Environmental Kuznets Curve (EKC) hypothesis. We undertake a comparative analysis between India and China over the period 1971–2012 by using the autoregressive distributed lag model of Pesaran et al. (2001). This study establishes a long-run effect of economic activity and trade openness and a short-run effect of energy use on CO2 emissions. It shows the N-shaped relationship between CO2 emissions and economic activity, a departure from the EKC hypothesis. The study ends with policy advisory for balancing between growth and environment.
The growing energy demand in progressing civilization governs the exploitation of various renewable sources over the conventional sources. Wind, Solar, Hydro, Biomass, and waste & Bagasse are the various available renewable sources in India. A reliable nonconventional geothermal source is also available in India but it is restricted to direct heat applications. This study archives the status of renewable alternatives in India. The techno economic factors and environmental aspects associated with each of these alternatives are discussed. This study focusses on prioritizing the renewable sources based on a parameter introduced as Energy Index. This index is evaluated using cumulative scores obtained for each of the alternatives. The cumulative score is obtained by evaluating each alternative over a range of eleven environmental and techno economic criteria following Fuzzy Analytical Hierarchy Process. The eleven criteria’s considered in the study are Carbon dioxide emissions (CO2), Sulphur dioxide emissions (SO2), Nitrogen oxide emissions (NOx), Land requirement, Current energy cost, Potential future energy cost, Turnkey investment, Capacity factor, Energy efficiency, Design period and Water consumption. It is concluded from the study that the geothermal source is the most preferable alternative with highest Energy Index. Hydro, Wind, Biomass and Solar sources are subsequently preferred alternatives.
The aim of this research is to investigate the pollution haven hypothesis (PHH) in Ghana utilizing CO2 emission as an indicator of air pollution for the period of 1980-2012. Moreover, we utilized gross domestic product (GDP), GDP square, energy consumption, renewable energy consumption, fossil fuel energy consumption, foreign direct investment, institutional quality, urbanization and trade openness as its main determinants. To achieve the goals of this research, different time series models were established utilizing the autoregressive distributed lag (ARDL) method. In addition to the fact that structural breaks are introduced into the estimation process, we contribute to the existing literature by focussing on a country that typifies the current scenario of increasing emission and foreign direct investment in the developing countries. The outcome of this research revealed cointegration which indicates the existence of long run relationship between the variables. Moreover, GDP, foreign direct investment, urban population, financial development and international trade have positive impact on CO2 emission, while institutional quality decreases emissions in Ghana. This indicates that PHH does exist in Ghana. A number of policy recommendations were provided for Ghana according to the results obtained.
Applying a recent bootstrap autoregressive distributed lag method, this article re-examines the energy-growth relationship for 22 OECD countries over the period 1966–2013. The empirical results suggest degenerate cases for eight countries. Only Japan is truly cointegrated. Some causality patterns are identified.
Despite the fact that previous studies have extensively investigated the renewable energy-growth nexus, those studies have not considered the role of technological innovation. This study examines the relationship between renewable energy consumption, technological innovation, economic growth, and CO2 emissions in the four Nordic countries by constructing a vector autoregression (VAR) model. On the basis of a modified version of the Granger non-causality test, the results show a unidirectional causality running from renewable energy to CO2 emissions for Denmark and Finland and a bidirectional causality between these variables for Sweden and Norway. The findings also indicate a unidirectional causality running from technological innovation to renewable energy and from growth to renewable energy for the four Nordic countries. The results could not confirm any causality from renewable energy to growth. Three policy implications are offered: (i) renewable energy improves environmental well-being, (ii) the Nordic countries have very low energy intensities and high energy efficiencies, and (iii) technological innovation plays an effective role in the renewable energy-growth nexus.
This study explored the relationship among income, carbon emissions, energy consumption, and trade openness for Morocco from 1971 to 2011. The Johansen cointegration technique confirmed the long run relationship among the variables. The energy consumption deteriorated the environment quality and found to be true for both short run and long run. Foreign trade is beneficial for environment quality as foreign trade openness has negative impact on carbon emissions. This study did not confirm the environmental Kuznets curve hypothesis in long run. Furthermore, there is a strong one way causation from income to carbon emissions. Thus, Morocco can improve environment quality by reducing the carbon emissions and it will not disturb economic pace of the economy. Therefore, energy and trade policies should be made growth oriented. In the same way energy production and consumption has to be made environmental friendly.
The aim of this research is to investigate the possible economic impacts of the trade liberalization on the environmental quality in Tunisia and Morocco. Specifically, the paper inspects whether or not liberalization of the trade sector has harmed the quality of the environment in both countries. To this end, we conduct various econometric models: a VECM and cointegration techniques for single country case study and a Panel VECM and Panel cointegration when using data of both countries as a group. We also include a dummy variable in each model to see the real impact of trade liberalization for both countries. In the empirical section, we found bidirectional causality between FDI and CO2. This implies that the nature of FDI inflows to Morocco and Tunisia are not clean FDI. These results show that trade liberalization has a negative impact on the environment. The paper concludes that although trade liberalization boosted the economies of both countries by creating new employment opportunities, liberalization has harmed the environment.
Existing studies have been concerned with the relationship between foreign direct investment and CO2 emissions in recent years. However, little attention has been paid to regional differences in China. This paper investigates the impact of FDI on China׳s CO2 emissions at the national and regional levels using provincial panel data from 1995 to 2010. The Stochastic Impacts by Regression on Population, Affluence, and Technology (STIRPAT) model was adopted. The results suggest that FDI contributes to CO2 emission reductions in China. FDI׳s impact on CO2 emissions decreases from the western region to the eastern and central regions. Our findings support the pollution halo hypothesis, which claims that foreign firms can export greener technologies from developed to developing countries and conduct business in an environmentally friendly manner.
Recently, Perron has carried out tests of the unit-root hypothesis against the alternative hypothesis of trend stationarity with a break in the trend occurring at the Great Crash of 1929 or at the 1973 oil-price shock. His analysis covers the Nelson-Plosser macroeconomic data series as well as a postwar quarterly real gross national product (GNP) series. His tests reject the unit-root null hypothesis for most of the series. This article takes issue with the assumption used by Perron that the Great Crash and the oil-price shock can be treated as exogenous events. A variation of Perron's test is considered in which the breakpoint is estimated rather than fixed. We argue that this test is more appropriate than Perron's because it circumvents the problem of data-mining. The asymptotic distribution of the estimated breakpoint test statistic is determined. The data series considered by Perron are reanalyzed using this test statistic. The empirical results make use of the asymptotics developed for the test statistic as well as extensive finite-sample corrections obtained by simulation. The effect on the empirical results of fat-tailed and temporally dependent innovations is investigated. In brief, by treating the breakpoint as endogenous, we find that there is less evidence against the unit-root hypothesis than Perron finds for many of the data series but stronger evidence against it for several of the series, including the Nelson-Plosser industrial-production, nominal-GNP, and real-GNP series.
This paper considers a revisited Environmental Kuznets Curve (EKC) hypothesis with potential impact of renewable energy consumption on environmental quality. To this end, paper aims at investigating the validity of the EKC hypothesis employing the dependent variable of CO2 emissions and regressors of GDP, quadratic GDP and renewable energy consumption. This paper, hence, analyzes this revisited EKC hypothesis to observe if (i) there exists an inverted-U shaped relationship between environmental quality (in terms of CO2 emissions), per capita income and per capita income squared and (ii) there exists a negative causality from renewables to CO2 emissions within EKC model.
Paper employs a panel data set of 17 OECD countries over the period 1977–2010 and launches panel FMOLS and panel DOLS estimations. The findings support the EKC hypothesis for the panel and indicate that GDP per capita and GDP per capita squared have the impacts on CO2 emissions positively and negatively, respectively, and that renewable energy consumption yields negative impact on CO2 emissions. Another remark of this paper is that the validity of EKC does not depend on income level of individual countries of panel in which EKC hypothesis holds.
Eventually, paper argues that if countries carry out (i) policies, i.e., for fair and easy access to the electricity from renewable sources and (ii) policies to increase renewables supply through i.e. improved renewable energy technologies, they will be able to contribute to combating global warming problem as they increase their GDP’s.