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Climate commitments and financial moderation: A deep dive into renewable energy's influence on OECD carbon footprints

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  • Hassan, Hassan
  • Tian, Shanwu
  • Safi, Adnan
  • Umar, Muhammad

Abstract

The emphasis placed on climate change at the COP28 summit highlights the need for a deeper understanding of the factors influencing sustainable development. Therefore, this study utilizes data from 27 OECD countries from 1992 to 2020 to investigate the complex relationships among renewable energy consumption (RE), environmental regulations (ER), financial efficiency (FE), and trade-adjusted carbon emissions (CCE). Additionally, we examine the moderating role of FE in the relationship between RE and CCE. This study employs the method of moment quantile regression to demonstrate that an increase in RE and more strict ER substantially reduces CCE. Similarly, FE has a significant inverse effect on environmental degradation. Further, we observe that as RE increases, FE plays a crucial moderating role, reinforcing the inverse relationship with CCE. In the context of the COP28 summit, this study recommends that policymakers integrate renewable energy strategies with financial restructuring to facilitate sustainable economic growth amidst climate change.

Suggested Citation

  • Hassan, Hassan & Tian, Shanwu & Safi, Adnan & Umar, Muhammad, 2024. "Climate commitments and financial moderation: A deep dive into renewable energy's influence on OECD carbon footprints," Economic Analysis and Policy, Elsevier, vol. 81(C), pages 1484-1495.
    • Handle: RePEc:eee:ecanpo:v:81:y:2024:i:c:p:1484-1495
    DOI: 10.1016/j.eap.2024.02.026
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