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Can Financial Institutional Deepening and Renewable Energy Consumption Lower CO 2 Emissions in G-10 Countries: Fresh Evidence from Advanced Methodologies

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  • Usman Mehmood

    (Remote Sensing, GIS and Climatic Research Lab, National Center of GIS and Space Applications, Centre for Remote Sensing, University of the Punjab, New-Campus, Lahore 54590, Pakistan
    Department of Political Science, University of Management and Technology, Lahore 54770, Pakistan)

  • Salman Tariq

    (Remote Sensing, GIS and Climatic Research Lab, National Center of GIS and Space Applications, Department of Space Science, University of the Punjab, New-Campus, Lahore 54590, Pakistan)

  • Zia Ul-Haq

    (Remote Sensing, GIS and Climatic Research Lab, National Center of GIS and Space Applications, Centre for Remote Sensing, University of the Punjab, New-Campus, Lahore 54590, Pakistan)

  • Ephraim Bonah Agyekum

    (Department of Nuclear and Renewable Energy, Ural Federal University Named after the First President of Russia Boris Yeltsin, 620002 Ekaterinburg, Russia)

  • Salah Kamel

    (Department of Electrical Engineering, Faculty of Engineering, Aswan University, Aswan 81542, Egypt)

  • Mohamed Elnaggar

    (Department of Electrical Engineering, College of Engineering, Prince Sattam Bin Abdulaziz University, Al-Kharj 16273, Saudi Arabia
    Department of Electrical Power and Machines Engineering, Faculty of Engineering, Helwan University, Helwan 11795, Egypt)

  • Hasan Nawaz

    (Remote Sensing, GIS and Climatic Research Lab, National Center of GIS and Space Applications, Centre for Remote Sensing, University of the Punjab, New-Campus, Lahore 54590, Pakistan)

  • Ammar Hameed

    (Remote Sensing, GIS and Climatic Research Lab, National Center of GIS and Space Applications, Centre for Remote Sensing, University of the Punjab, New-Campus, Lahore 54590, Pakistan)

  • Shafqat Ali

    (Remote Sensing, GIS and Climatic Research Lab, National Center of GIS and Space Applications, Centre for Remote Sensing, University of the Punjab, New-Campus, Lahore 54590, Pakistan)

Abstract

To tackle the challenges associated with global warming and climate change, several countries set their targets to lower carbon emissions in accordance with COP21 (Paris Conference). Even though studies highlighted the different aspects that contribute to environmental degradation, there still exists the scarcity of adequate research that emphasizes the environmental implications of financial institutional deepening, renewable energy consumption (REC), and technology innovations. Therefore, this study investigated the significance of financial institutional deepening, REC, gross domestic product (GDP), imports, exports, and technology innovations to achieve sustainability in G-10 countries, namely The Netherlands, Germany, France, Switzerland, United Kingdom, Sweden, Japan, Belgium, Canada, and Italy from 1990 to 2020. The results obtained from cross-sectionally augmented autoregressive distributed lag (CS-ARDL) and the dynamic common correlated effects mean group (DCCEMG) models reveal that financial institutional deepening and imports positively impact CO 2 emissions (CO 2 e) both in the long and short run. A 1% increase in financial institutional deepening and import will increase CO 2 e by 0.5403% and 0.2942% in the short run and 0.2980% and 0.1479% in the long run levels, respectively. Contrary to this, REC, GDP, exports, and technology innovations improve environmental quality in these countries. The Dumitrescu & Hurlin causality test shows bidirectional causality between imports and CO 2 e, GDP and CO 2 e, exports and CO 2 e, and financial institutional deepening and CO 2 e, compared to unidirectional causality from technology innovations to CO 2 e and from REC to CO 2 e. Apart from this, the outcomes suggest that policymakers in G-10 countries have to consider their financial markets and firms to revise their current environmental policies.

Suggested Citation

  • Usman Mehmood & Salman Tariq & Zia Ul-Haq & Ephraim Bonah Agyekum & Salah Kamel & Mohamed Elnaggar & Hasan Nawaz & Ammar Hameed & Shafqat Ali, 2022. "Can Financial Institutional Deepening and Renewable Energy Consumption Lower CO 2 Emissions in G-10 Countries: Fresh Evidence from Advanced Methodologies," IJERPH, MDPI, vol. 19(9), pages 1-18, May.
    • Handle: RePEc:gam:jijerp:v:19:y:2022:i:9:p:5544-:d:807718
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