Testing the ecological effect of wind and solar energy consumption: A novel regularized common correlated effect approach for top oil‐importing countries

Top oil importer countries produce large amounts of carbon emission and pollute soil and water, threatening sustainable development. Given this issue, this study examines the impact of solar energy consumption, wind energy consumption, and natural resources rent on the environmental conditions of the top five oil‐importing countries (China, the United States, India, Japan, and South Korea) for the period 1997–2021. In this context, the study analyzes the validity of the environmental Kuznets curve and load capacity curve hypotheses for the top five oil‐importing countries using the novel regularized common correlated effects method. The regularized common correlated effect results show that the environmental Kuznets curve and load capacity curve hypotheses are valid and that wind energy consumption supports environmental quality by helping to reduce carbon emissions and increase the load capacity factor. However, solar energy usage and natural resources rent have no impact on ecological quality. Based on these outcomes, the top five oil importers can provide a better environment for their societies by promoting wind energy consumption while taking environmental concerns into account.