Heterogeneous Effects of Energy Efficiency and Renewable Energy on Carbon Emissions: Evidence From Developing Countries – Journal of Cleaner Production – article

Heterogeneous Effects of Energy Efficiency and Renewable Energy on Carbon Emissions: Evidence From Developing Countries

Rabia Akram, Fuzhong Chen, Fahad Khalid, Zhiwei Ye, Muhammad Tariq Majeed | Journal of Cleaner Production

2019-11-19

The adoption of energy-efficient and clean energy resources is crucial in reducing greenhouse gas emissions. The study analyzes the heterogeneous effects of energy efficiency (EE), renewable energy (RE), and other variables on carbon emissions within the context of the environment Kuznets curve (EKC) hypothesis in 66 developing countries from 1990 to 2014. This study incorporates the role of EE in the construction of the EKC hypothesis, which has been neglected in the previous literature. By using panel ordinary least squares and fixed-effect panel quantile regression (PQR), we find that the impact of the decisive factors of CO2 emissions are heterogeneous across different quantiles. Specifically, EE reduces CO2 emissions across all quantiles, but the mitigation effect is strongest at the 90th quantile. RE reduces CO2 emissions and shows a substantial effect at the 10th quantile. Nuclear energy consumption reduces CO2 emissions but significantly influences carbon emissions only at the 50th quantile. GDP (Y) increases CO2 emissions, but the escalating effect of Y increases at the upper quantiles. The squared of GDP (Y2) reduces CO2 emissions and shows the strongest mitigation effect at the upper quantiles. The quantile coefficients of Y and Y2 are significantly positive and negative, respectively, thereby verifying the existence of the EKC hypothesis in developing countries. In sum, EE and RE contribute to reducing carbon emissions in developing countries. These results also verify EE as an essential factor in the formation of the EKC hypothesis in developing countries and offer some important recommendations for designing and implementing appropriate economic and energy policies to achieve environment sustainability in these countries.

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