The key roles of renewable energy and economic growth in disaggregated environmental degradation

Article  -  Wednesday, 21 June 2023

Kostakis, I. and Arauzo-Carod, J.M (2023): “The key roles of renewable energy and economic growth in disaggregated environmental degradation: Evidence from highly developed, heterogeneous and cross-correlated countries”, Renewable Energy

This paper investigates the validity of the environmental Kuznets curve (EKC) hypothesis for the G7 group of countries through the ecological footprint and its components (namely built-up land, carbon, cropland, fishing grounds, forest land, and grazing land). Most previous contributions rely on CO2 emissions as a measure of environmental damage, whereas using disaggregated ecological footprint allows us to consider resource consumption and waste generation compared to nature's resource generation and waste absorption.

The empirical application is based on a panel data analysis for G7 countries from 1980 to 2018. The results indicate that the EKC hypothesis is confirmed for the ecological footprint overall, but the impact of GDP growth is unequal across its components. Long-term elasticities point to renewable energy generation significantly improving environmental sustainability. Globalization also decreases pollution indicators, while economic complexity seems to contribute to environmental degradation. 

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