Transitioning to low carbon economy among OECD countries: Do renewable energy,globalization and higher economic growth matter?

Abstract

Facts have proven that humanity has incurred a significant environmental cost in the process of gaining economic success due to a surge in carbon dioxide emissions. Nevertheless, if carbon emissions are not curbed at the same time, economic growth may be slowed or stopped completely. It is for this reason that OECD member countries have set out plans to cut emissions. For this reason, the current paper scrutinizes the consequence of renewable energy intake, nonrenewable energy usage, economic globalization and economic progress on environmental destruction among 28 OECD countries by means of data spanning 1990 to 2019 period. The augmented mean group heterogeneous panel model and the common correlated effects mean group regression technique revealed evidence of a positive and negative significant connection between economic progress, and square of economic progress and carbon emission respectively (thus justifying the presence of the reversed U-shaped curve hypothesis) for OECD countries. Moreover, both renewable energy intake and economic globalization reveal a destructive connection with environmental destruction while nonrenewable energy intake has positive significant relationship with the environment. It was also disclosed that renewable energy intensifies the environmental destruction reducing effect of globalization and negatively moderates the impact of economic progress on environmental destruction. On the basis of the findings, appropriate policy recommendations have been developed to assist these economies in their efforts to dissociate economic progress from environmental destruction.