Advertisement

Renewable energy, economic growth, human capital, and CO2 emission: an empirical analysis

  • Nasir MahmoodEmail author
  • Zhaohua Wang
  • Syed Tauseef Hassan
Research Article
  • 57 Downloads

Abstract

This study contributes to the literature by estimating the interaction effects of economic growth and renewable energy consumption on carbon dioxide (CO2) emissions with the inclusion of human capital. The interaction between economic growth and renewable energy consumption suggests how income level affects energy consumption and CO2 emissions. The study applies three-stage least square and ridge regression methods with Pakistani data from 1980 to 2014. The empirical findings show that the interaction effect of income and renewable energy contributes to CO2 emissions. Besides, trade openness also increases CO2 emissions, while the human capital mitigates CO2 emissions. Furthermore, the moderating effect of economic growth helps to form the environmental Kuznets curve (EKC) hypothesis in Pakistan.

Keywords

Renewable energy Human capital CO2 emissions 3SLS Pakistan 

Abbreviations

CO2

carbon dioxide

3SLS

three-stage least square

EKC

environmental Kuznets curve

GDP

gross domestic product

NRE

non-renewable energy

OECD

Organization for Economic Co-operation and Development

OLS

ordinary least square

RMSE

root means square of error

SEM

simultaneous equation model

USA

United States of America

WDI

World Development Indicator

Notes

Funding information

The study is completed under National Science Fund for Distinguished Young Scholars (Reference No. 71625003), Yangtze River Distinguished Professor of MOE, National Key Research and Development Program of China (Reference No. 2016YFA0602504), National Natural Science Foundation of China (Reference No. 91746208, 71573016,71403021, 71521002, 71774014), National Social Sciences Foundation (Reference No.17ZDA065). Humanities and Social science Fund of Ministry of Education of China (Reference No.17YJC630145), and China Postdoctoral Science Foundation (Reference No. 2017M620648). The authors are grateful to Kai Tang an associte professor at Guangdong university and foreign studies Guangzhou China and Yuantao Yang Phd Scholar at Beijing Institute and Technology for helping in editing and language correction.

References

  1. Al-Mulali U, Ozturk I, Solarin SA, Adebola S (2016) Investigating the environmental Kuznets curve hypothesis in seven regions: the role of renewable energy. Ecol Indic 67:267–282.  https://doi.org/10.1016/j.ecolind.2016.02.059 CrossRefGoogle Scholar
  2. Alper A, Oguz O (2016) The role of renewable energy consumption in economic growth: evidence from asymmetric causality. Renew Sust Energ Rev 60:953–959.  https://doi.org/10.1016/j.rser.2016.01.123 CrossRefGoogle Scholar
  3. Apergis N, Payne JE (2010) Renewable energy consumption and economic growth: evidence from a panel of OECD countries. Energy Policy 38:656–660.  https://doi.org/10.1016/j.enpol.2009.09.002 CrossRefGoogle Scholar
  4. Apergis N, Payne JE (2012) Renewable and non-renewable energy consumption-growth nexus: evidence from a panel error correction model. Energy Econ 34:733–738.  https://doi.org/10.1016/j.eneco.2011.04.007 CrossRefGoogle Scholar
  5. Bakhsh K, Rose S, Ali MF, Ahmad N, Shahbaz M (2017) Economic growth, CO2emissions, renewable waste and FDI relation in Pakistan: new evidence from 3SLS. J Environ Manag 196:627–632.  https://doi.org/10.1016/j.jenvman.2017.03.029 CrossRefGoogle Scholar
  6. Baloch MA, Danish, Meng F, et al (2018) Financial instability and CO2 emissions: the case of Saudi Arabia. Environ Sci Pollut Res 25:26030–26045.  https://doi.org/10.1007/s11356-018-2654-2
  7. Baloch MA, Danish, Meng F (2019a) Modeling the non-linear relationship between financial development and energy consumption: statistical experience from OECD countries. Environ Sci Pollut Res 26.  https://doi.org/10.1007/s11356-019-04317-9
  8. Baloch MA, Zhang J, Iqbal K, Iqbal Z (2019b) The effect of financial development on ecological footprint in BRI countries: evidence from panel data estimation. Environ Sci Pollut Res 26:6199–6208.  https://doi.org/10.1007/s11356-018-3992-9
  9. Balsalobre-lorente D, Shahbaz M, Roubaud D, Farhani S (2018) How economic growth, renewable electricity and natural resources contribute to CO2emissions? Energy Policy 113:356–367.  https://doi.org/10.1016/j.enpol.2017.10.050 CrossRefGoogle Scholar
  10. Bano S, Zhao Y, Ahmad A, Wang S, Liu Y (2018) Identifying the impacts of human capital on carbon emissions in Pakistan. J Clean Prod 183:1082–1092.  https://doi.org/10.1016/j.jclepro.2018.02.008 CrossRefGoogle Scholar
  11. Bekhet HA, Matar A, Yasmin T (2017) CO2 emissions, energy consumption, economic growth, and financial development in GCC countries: dynamic simultaneous equation models. Renew Sust Energ Rev 70:117–132.  https://doi.org/10.1016/j.rser.2016.11.089 CrossRefGoogle Scholar
  12. Ben Jebli M, Ben Youssef S (2015) The environmental Kuznets curve, economic growth, renewable and non-renewable energy, and trade in Tunisia. Renew Sust Energ Rev 47:173–185.  https://doi.org/10.1016/j.rser.2015.02.049 CrossRefGoogle Scholar
  13. Bölük G, Mert M (2015) The renewable energy, growth and environmental Kuznets curve in Turkey: an ARDL approach. Renew Sust Energ Rev 52:587–595.  https://doi.org/10.1016/j.rser.2015.07.138 CrossRefGoogle Scholar
  14. Brini R, Amara M, Jemmali H (2017) Renewable energy consumption, international trade, oil price and economic growth inter-linkages: the case of Tunisia. Renew Sust Energ Rev 76:620–627.  https://doi.org/10.1016/j.rser.2017.03.067 CrossRefGoogle Scholar
  15. Cerdeira Bento JP, Moutinho V (2016) CO2 emissions, non-renewable and renewable electricity production, economic growth, and international trade in Italy. Renew Sust Energ Rev 55:142–155.  https://doi.org/10.1016/j.rser.2015.10.151 CrossRefGoogle Scholar
  16. Charfeddine L (2017) The impact of energy consumption and economic development on ecological footprint and CO 2 emissions: evidence from a Markov switching equilibrium correction model. Energy Econ 65:355–374.  https://doi.org/10.1016/j.eneco.2017.05.009 CrossRefGoogle Scholar
  17. Cumby RE, Huizinga J, Obstfeld M (1983) Two-step two-stage least squares estimation in models with rational expectations. J Econ 21:333–355.  https://doi.org/10.1016/0304-4076(83)90049-0 CrossRefGoogle Scholar
  18. Danish, Zhang B, Wang B, Wang Z (2017a) Role of renewable energy and non-renewable energy consumption on EKC: evidence from Pakistan. J Clean Prod 156:855–864.  https://doi.org/10.1016/j.jclepro.2017.03.203 CrossRefGoogle Scholar
  19. Danish, Zhang B, Wang Z, Wang B (2017b) Energy production, economic growth and CO2 emission: evidence from Pakistan. Nat Hazards 90:1–24.  https://doi.org/10.1007/s11069-017-3031-z Google Scholar
  20. Danish, Baloch MA, Suad S (2018a) Modeling the impact of transport energy consumption on CO2emission in Pakistan: evidence from ARDL approach. Environ Sci Pollut Res 25:9461–9473.  https://doi.org/10.1007/s11356-018-1230-0
  21. Danish, Wang B, Wang Z (2018b) Imported technology and CO2emission in China: collecting evidence through bound testing and VECM approach. Renew Sust Energ Rev 82:4204–4214.  https://doi.org/10.1016/j.rser.2017.11.002 CrossRefGoogle Scholar
  22. Danish, Hassan ST, Baloch MA, Mehmood N, Zhang J (2019) Linking economic growth and ecological footprint through human capital and biocapacity. Sustain Cities Soc 47:101516.  https://doi.org/10.1016/j.scs.2019.101516 CrossRefGoogle Scholar
  23. Destek MA (2016) Renewable energy consumption and economic growth in newly industrialized countries: evidence from asymmetric causality test. Renew Energy 95:478–484.  https://doi.org/10.1016/j.renene.2016.04.049 CrossRefGoogle Scholar
  24. Destek MA, Aslan A (2017) Renewable and non-renewable energy consumption and economic growth in emerging economies: evidence from bootstrap panel causality. Renew Energy 111:757–763.  https://doi.org/10.1016/j.renene.2017.05.008 CrossRefGoogle Scholar
  25. Dogan E, Aslan A (2017) Exploring the relationship among CO2 emissions, real GDP, energy consumption and tourism in the EU and candidate countries: evidence from panel models robust to heterogeneity and cross-sectional dependence. Renew Sust Energ Rev 77:239–245.  https://doi.org/10.1016/j.rser.2017.03.111 CrossRefGoogle Scholar
  26. Dogan E, Seker F (2016) The influence of real output, renewable and non-renewable energy, trade and financial development on carbon emissions in the top renewable energy countries. Renew Sust Energ Rev 60:1074–1085.  https://doi.org/10.1016/j.rser.2016.02.006 CrossRefGoogle Scholar
  27. Dong K, Sun R, Jiang H, Zeng X (2018) CO2emissions, economic growth, and the environmental Kuznets curve in China: what roles can nuclear energy and renewable energy play? J Clean Prod 196:51–63.  https://doi.org/10.1016/j.jclepro.2018.05.271 CrossRefGoogle Scholar
  28. Esso LJ, Keho Y (2016) Energy consumption, economic growth and carbon emissions: cointegration and causality evidence from selected African countries. Energy 114:492–497.  https://doi.org/10.1016/j.energy.2016.08.010 CrossRefGoogle Scholar
  29. Fang Z, Chang Y (2016) Energy, human capital and economic growth in Asia Pacific countries - evidence from a panel cointegration and causality analysis. Energy Econ 56:177–184.  https://doi.org/10.1016/j.eneco.2016.03.020 CrossRefGoogle Scholar
  30. Grossman GM, Krueger AB (1991) Environmental impacts of a north American free trade agreement. Natl Bur Econ Res Work Pap Ser No 3914:1–57.  https://doi.org/10.3386/w3914 Google Scholar
  31. Imran H (2018) Impact of economic growth, nonrenewable and renewable energy consumption, and urbanization on carbon emissions in sub-Saharan Africa. Environ Sci Pollut Res 1–11:15057–15067.  https://doi.org/10.1007/s11356-018-1753-4 Google Scholar
  32. Inglesi-Lotz R, Dogan E (2018) The role of renewable versus non-renewable energy to the level of CO2emissions a panel analysis of sub- Saharan Africa’s Βig 10 electricity generators. Renew Energy 123:36–43.  https://doi.org/10.1016/j.renene.2018.02.041 CrossRefGoogle Scholar
  33. Ito K (2017) CO2 emissions, renewable and non-renewable energy consumption, and economic growth: evidence from panel data for developing countries. Int Econ 151:1–6.  https://doi.org/10.1016/j.inteco.2017.02.001 CrossRefGoogle Scholar
  34. Iwata H, Okada K, Samreth S (2011) A note on the environmental Kuznets curve for CO2: a pooled mean group approach. Appl Energy 88:1986–1996.  https://doi.org/10.1016/j.apenergy.2010.11.005 CrossRefGoogle Scholar
  35. Jebli MB, Youssef SB, Ozturk I (2016) Testing environmental Kuznets curve hypothesis: the role of renewable and non-renewable energy consumption and trade in OECD countries. Ecol Indic 60:824–831.  https://doi.org/10.1016/j.ecolind.2015.08.031 CrossRefGoogle Scholar
  36. Katircioglu ST (2014) International tourism, energy consumption, and environmental pollution: the case of Turkey. Renew Sust Energ Rev 36:180–187.  https://doi.org/10.1016/j.rser.2014.04.058 CrossRefGoogle Scholar
  37. Kocak E, Sarkgunesi A (2017) The renewable energy and economic growth nexus in black sea and Balkan Countries. Energy Policy 100:51–57.  https://doi.org/10.1016/j.enpol.2016.10.007 CrossRefGoogle Scholar
  38. Krueger G (1995) Economic Growth and the Environment Author ( s ): Gene M . Grossman and Alan B . Krueger Published by : Oxford University Press Stable URL : http://www.jstor.org/stable/2118443 JSTOR is a not-for-profit service that helps scholars , researchers , and stud 110, 353–377
  39. Moomaw WR, Unruh GC (1997) Are environmental Kuznets curves misleading us? The case of CO2 emissions. Environ Dev Econ 2:451–463.  https://doi.org/10.1017/S1355770X97000247 CrossRefGoogle Scholar
  40. Munasinghe M (1999) Is environmental degradation an inevitable consequence of economic growth: tunneling through the environmental Kuznets curve 29, 89–109Google Scholar
  41. Ng BYS, Perron P (2001) Lag length selection and the construction of unit root tests with good size and power author ( s ): Serena Ng and Pierre Perron published by : the econometric society stable URL : http://www.jstor.org/stable/2692266 . Econometrica 69:1519–1554
  42. Ouedraogo NS (2013) Energy consumption and human development: evidence from a panel cointegration and error correction model. Energy 63:28–41.  https://doi.org/10.1016/j.energy.2013.09.067 CrossRefGoogle Scholar
  43. Ozcan B (2013) The nexus between carbon emissions, energy consumption and economic growth in Middle East countries: a panel data analysis. Energy Policy 62:1138–1147.  https://doi.org/10.1016/j.enpol.2013.07.016 CrossRefGoogle Scholar
  44. Pao HT, Fu HC (2013) Renewable energy, non-renewable energy and economic growth in Brazil. Renew Sust Energ Rev 25:381–392.  https://doi.org/10.1016/j.rser.2013.05.004 CrossRefGoogle Scholar
  45. Rafindadi AA, Ozturk I (2016) Impacts of renewable energy consumption on the German economic growth: evidence from combined cointegration test. Renew Sust Energ Rev 75:0–1.  https://doi.org/10.1016/j.rser.2016.11.093 Google Scholar
  46. Salim R, Yao Y, Chen GS (2017) Does human capital matter for energy consumption in China? Energy Econ 67:49–59.  https://doi.org/10.1016/j.eneco.2017.05.016 CrossRefGoogle Scholar
  47. Sapkota P, Bastola U (2017) Foreign direct investment, income, and environmental pollution in developing countries: panel data analysis of Latin America. Energy Econ 64:206–212.  https://doi.org/10.1016/j.eneco.2017.04.001 CrossRefGoogle Scholar
  48. Sarkodie SA, Strezov V (2018) Empirical study of the environmental Kuznets curve and environmental sustainability curve hypothesis for Australia, China, Ghana and USA. J Clean Prod 201:98–110.  https://doi.org/10.1016/j.jclepro.2018.08.039 CrossRefGoogle Scholar
  49. Sarkodie SA, Strezov V (2019) Effect of foreign direct investments, economic development and energy consumption on greenhouse gas emissions in developing countries. Sci Total Environ 646:862–871.  https://doi.org/10.1016/j.scitotenv.2018.07.365 CrossRefGoogle Scholar
  50. Shoaib (2013) Economic Survey of Pakistan,Finance Division, Economic, Advisor’s Wing. Government of Pakistan, Islamabad. http://www.finance.gov.pk/survey_1213.html
  51. Sinha A, Shahbaz M (2018) Estimation of environmental Kuznets curve for CO2emission: role of renewable energy generation in India. Renew Energy 119:703–711.  https://doi.org/10.1016/j.renene.2017.12.058 CrossRefGoogle Scholar
  52. Tansel C, Ozturk I, Aslan A, Tugcu CT, Ozturk I, Aslan A (2012) Renewable and non-renewable energy consumption and economic growth relationship revisited: evidence from G7 countries. Energy Econ 34:1942–1950.  https://doi.org/10.1016/j.eneco.2012.08.021 CrossRefGoogle Scholar
  53. Ulucak R, Bilgili F (2018) A reinvestigation of EKC model by ecological footprint measurement for high, middle and low income countries. J Clean Prod 188:144–157.  https://doi.org/10.1016/j.jclepro.2018.03.191 CrossRefGoogle Scholar
  54. Venter O, Sanderson EW, Magrach A, Allan JR, Beher J, Jones KR, Possingham HP, Laurance WF, Wood P, Fekete BM, Levy MA, Watson JEM (2016) Sixteen years of change in the global terrestrial human footprint and implications for biodiversity conservation. Nat Commun 7:1–11.  https://doi.org/10.1038/ncomms12558 CrossRefGoogle Scholar
  55. Wang S, Li G, Fang C (2017) Urbanization, economic growth, energy consumption, and CO 2 emissions: empirical evidence from countries with different income levels. Renew Sust Energ Rev 81:1–16.  https://doi.org/10.1016/j.rser.2017.06.025 Google Scholar
  56. Wang Z, Danish, Zhang B, Wang B (2018) Renewable energy consumption, economic growth and human development index in Pakistan: evidence form simultaneous equation model. J Clean Prod 184:1081–1090.  https://doi.org/10.1016/j.jclepro.2018.02.260 CrossRefGoogle Scholar
  57. World Bank (2017) The World Bank Group’s mission consists of two ambitious, but achievable, goals. World Bank Annual Report 2017. http://pubdocs.worldbank.org/en/908481507403754670/Annual-Report-2017-WBG.pdf
  58. Xu Z, Baloch MA, Danish, et al (2018) Nexus between financial development and CO2 emissions in Saudi Arabia: analyzing the role of globalization. Environ Sci Pollut Res 25:28378–28390.  https://doi.org/10.1007/s11356-018-2876-3
  59. Yildirim E, Saraç Ş, Aslan A (2012) Energy consumption and economic growth in the USA: evidence from renewable energy. Renew Sust Energ Rev 16:6770–6774.  https://doi.org/10.1016/j.rser.2012.09.004 CrossRefGoogle Scholar
  60. Zoundi Z (2016) CO2 emissions, renewable energy and the Environmental Kuznets Curve, a panel cointegration approach. Renew Sust Energ Rev 72:0–1.  https://doi.org/10.1016/j.rser.2016.10.018 Google Scholar

Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2019

Authors and Affiliations

  • Nasir Mahmood
    • 1
    • 2
    Email author
  • Zhaohua Wang
    • 1
    • 2
    • 3
    • 4
    • 5
  • Syed Tauseef Hassan
    • 1
  1. 1.School of Management and EconomicsBeijing Institute of TechnologyBeijingChina
  2. 2.Center for Energy and Environmental Policy ResearchBeijing Institute of TechnologyBeijingChina
  3. 3.Collaborative Innovation Center of Electric Vehicles in BeijingBeijingChina
  4. 4.Beijing Key Lab of Energy Economics and Environmental ManagementBeijingChina
  5. 5.Sustainable Development Research Institute for Economy andSociety of BeijingBeijingChina

Personalised recommendations