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The role of eco-innovation on CO2 emission reduction in an extended version of the environmental Kuznets curve: evidence from the top 20 refined oil exporting countries

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Abstract

This study empirically investigates the role of eco-innovation on the reduction of carbon dioxide emissions (CO2) in an extended version of the environmental Kuznets curve (EKC). Under dynamic framework, second-generation panel econometric techniques such as the CADF and the CIPS unit root tests, DSUR cointegrating test, and DH panel causality test are employed over the period 2007–2016 for the case of top 20 refined oil exporting countries. Results reveal that eco-innovation (i.e. research and development) exerts a negative and significant long-term effect on carbon emissions (CO2). This result indicates that the extended version of EKC and the Porter hypotheses are validated for the selected countries. The findings, which show heterogeneity and cross-sectionally dependence in the panel time-series framework, suggest that rising levels of carbon emissions and real income may encourage more research and development (i.e. eco innovation) and lower energy consumption.

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Notes

  1. https://unfccc.int/process-and-meetings/the-kyoto-protocol/what-is-thekyoto-protocol/what-is-the-kyoto-protocol.

  2. https://unfccc.int/process-and-meetings/the-paris-agreement/what-is-the-parisagreement.

  3. See http://www.europarl.europa.eu/EPRS/EPRS-AaG-559475-Doha-Agreement-Kyoto-Protocol-FINAL.pdf for more details.

  4. This sector has been remained as a central source of energy (see Duch-Brown and Costa-Campi 2015).

  5. Cheng et al. (2018) points out that technological improvement is the primary reason of reducing carbon emissions.

  6. See (Porter, 1991 and Porter and van der Linde, 1995) for more details about the Porter hypothesis (PH).

  7. See Wagner (2003) and Ambec & Barla (2002; 2006) for more details about a theoretical foundation of Porter's hypothesis. See also Van Leeuwen and Mohnen (2017) for an empirical analysis of green innovation via Porter's hypothesis.

  8. See http://www.worldstopexports.com/refined-oil-exports-by-country/, and Table 1 to get more details about these countries. The countries are noteworthy in terms of their contribution to CO2 emissions and the size of their investments in eco-innovation.

  9. Employed data were extracted from World Bank (http://data.worldbank.org) except R&D data (https://www.oecd-ilibrary.org/).

  10. Research and development (R&D) which is proxy for eco-innovation and this proxy reflects expenditures in terms of development of a new technology that may improve operation processes and contribute to CO2 reduction.

  11. Eco-innovation proxies such as training and environmental investment could also be used. However, they are not available in the relevant data set for some countries.

  12. Our empirical test results have been carried out by both Gauss 16.0 and Stata 15.1.

  13. This is a second-generation long-run estimator. See Mark et al. (2005) for more details.

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Authors and Affiliations

  1. Department of Business Administration, Eastern Mediterranean University, P.O. Box 99628, Famagusta, North Cyprus

    Sami Fethi

  2. Department of Banking and Finance, Eastern Mediterranean University, P.O. Box 99628, Famagusta, North Cyprus

    Abdulhamid Rahuma

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  1. Sami Fethi
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Correspondence to Sami Fethi.

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Fethi, S., Rahuma, A. The role of eco-innovation on CO2 emission reduction in an extended version of the environmental Kuznets curve: evidence from the top 20 refined oil exporting countries. Environ Sci Pollut Res 26, 30145–30153 (2019). https://doi.org/10.1007/s11356-019-05951-z

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