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Nonrenewable and renewable energy consumption, trade openness, and environmental quality in G-7 countries: the conditional role of technological progress

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Abstract

The present study empirically investigates the tripartite impacts of renewable energy (RE), nonrenewable energy (NRE), and trade openness (TO) with the conditioning role of technology on environmental quality (CO2 emission) for the G-7 countries (Canada, France, Germany, Japan, Italy, USA, and United Kingdom) for the period straddling 1990–2019. The empirical analyses are anchored on a set of estimation procedures including; cross-sectional dependence test, second generation panel unit root test, Westerlund cointegration test, Hausman test, and pooled mean group (PMG). The following results emanate from the findings. First, the presence of cross-sectional dependence and long-run relationships are confirmed for the countries. Second, RE significantly lessens the prevalence of carbon emissions across the estimated models. This further underscores the mitigating effects of RE on CO2 emissions for the G-7 countries. Third, the impacts of NRE and TO are found to contribute to surge in CO2 emissions. Fourth, the effects of technological progress captured by research and development (RD) and eco-innovation significantly reduce the stock of CO2 emissions using both unconditional (single effect) and conditional (interactive effect) methods. Fifth, the existence of Environmental Kuznets Curve (EKC) receives empirical support for the G-7 countries. Other covariates such as foreign direct investment (FDI), Gross Fixed Capital Formation (GCFC), and service value-added (SVA) exert diverging impacts on CO2 emissions. Sixth, the country-level analyses show the heterogeneous nature of the G-7 countries as evident from each country’s findings.

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Availability of data and materials

The datasets generated during and/or analyzed during the current study are available in: World Bank Development Indicators (WDI): https://databank.worldbank.org/source/world-development-indicators.

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  1. Department of Economics, University of Lagos, Lagos, Nigeria

    Ridwan Lanre Ibrahim & Kazeem Bello Ajide

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  1. Ridwan Lanre Ibrahim
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  2. Kazeem Bello Ajide
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Contributions

RLI develops the background and methodology.

KBA works on the literature, background, and proofreads.

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Correspondence to Ridwan Lanre Ibrahim.

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Highlights

•The study investigates the impacts of renewable energy (RE), nonrenewable energy (NRE), trade openness (TO), and technological progress on environmental quality (CO2 emission) of the G-7 countries (Canada, France, Germany, Japan, Italy, USA, and United Kingdom).

• Second generation methodologies are employed.

•RE significantly lessens the prevalence of CO2 emission.

•NRE and TO significantly contribute to the surge in CO2 emission.

•The unconditional and conditional effects of technology captured by research and development, and environment-related technology significantly reduce CO2 emission.

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Ibrahim, R.L., Ajide, K.B. Nonrenewable and renewable energy consumption, trade openness, and environmental quality in G-7 countries: the conditional role of technological progress. Environ Sci Pollut Res 28, 45212–45229 (2021). https://doi.org/10.1007/s11356-021-13926-2

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  • DOI: https://doi.org/10.1007/s11356-021-13926-2

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