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Does green innovation, energy productivity and environmental taxes limit carbon emissions in developed economies: Implications for sustainable development

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  • Xie, Peijun
  • Jamaani, Fouad

Abstract

The present study considers environment related tax (ERT), energy productivity (ENEP), green innovation (GI), renewable energy (REC), and gross domestic product (GDP) that explains the variation in carbon emissions of the group of seven (G-7) from 1990 to 2020. The empirical analyses include various diagnostic tests, followed by advanced econometric techniques of panel cointegration, Method of Moment Quantile Regression (MMQR), and Dumitrescu & Hurlin panel causality. The findings reveal the presence of cross-sectional dependence, heterogeneous slope models, and mixed order of integration. Moreover, long term cointegration association is confirmed by Westerlund panel cointegration. The results of MMQR report that renewable energy, green innovation, and environmental taxes significantly mitigate carbon emissions, while GDP cause rise in CO2 emissions in the G-7 economies. These results are also validated by the outcomes of Quantile Regressions. Finally, a bi-directional causal association is confirmed amongst all the factors under investigations in this study. The G-7 economies should focus on renewable energy consumption (REC), encouragement and support of green innovations (GI) and initiatives to boost energy productivity (ENEP). Moreover, the policy makers should consider the crucial coordination among environmental taxes, energy productivity, renewable energy, green innovation as these factors have a strong influence on each other.

Suggested Citation

  • Xie, Peijun & Jamaani, Fouad, 2022. "Does green innovation, energy productivity and environmental taxes limit carbon emissions in developed economies: Implications for sustainable development," Structural Change and Economic Dynamics, Elsevier, vol. 63(C), pages 66-78.
  • Handle: RePEc:eee:streco:v:63:y:2022:i:c:p:66-78
    DOI: 10.1016/j.strueco.2022.09.002
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    2. Feng, Yuan & Chen, Zhi & Nie, Changfei, 2023. "The effect of broadband infrastructure construction on urban green innovation: Evidence from a quasi-natural experiment in China," Economic Analysis and Policy, Elsevier, vol. 77(C), pages 581-598.
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    Keywords

    Energy productivity; Green innovation; Carbon emissions; Environment-related tax; Renewable energy consumption; G7 countries;
    All these keywords.

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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