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Does environmental sustainability affect the renewable energy consumption? Nexus among trade openness, CO2 emissions, income inequality, renewable energy, and economic growth in OECD countries

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Abstract 

This study investigates the impact of carbon emissions, real oil prices, income inequality, economic growth, and trade openness on renewable energy consumption (REC) in twenty-three (23) OECD economies. The study employs the Westerlund panel cointegration technique to verify the existence of long-run equilibrium and the Augmented Mean Group (AMG) estimator to assess the long-run relationship between the variables, which allows for slope heterogeneity and cross-sectional dependency. Moreover, the panel causality test of Dumitrescu and Hurlin (DH) is utilized to gauge the causal relationship between the variables. The findings of our study reveal that REC is positively related to economic growth, real oil prices, income inequality, and trade openness, but negatively related to CO2 emissions in OECD countries. In addition, there is one-way causality from GDP per capita to renewable energy consumption and a bidirectional causality between income inequality and REC. Furthermore, the results indicate that OECD policymakers and governments should regard foreign trade as a “clean energy fostering mechanism” while developing energy demand policies that are environmentally friendly.

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Acknowledgements

This paper is based on the Ph.D. dissertation of Iftikhar Muhammad. The views, information, or opinions expressed in papers are those of the authors, and the usual disclaimer applies.

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Iftikhar Muhammad: conceptualization, investigation; Malik Shahzad: data creation, resources, methodology. Rasim Ozcan: methodology, formal analysis; Vipin Jain: data analysis and its interpretation. Paritosh Sharma: Abstract and Conclusion sections, formation of paper as per journal requirements.

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Correspondence to Iftikhar Muhammad.

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Appendix

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Table 10

Table 10 List of countries 

11

Table 11 Variance inflation factors (VIF)

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Muhammad, I., Ozcan, R., Jain, V. et al. Does environmental sustainability affect the renewable energy consumption? Nexus among trade openness, CO2 emissions, income inequality, renewable energy, and economic growth in OECD countries. Environ Sci Pollut Res 29, 90147–90157 (2022). https://doi.org/10.1007/s11356-022-22011-1

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