Investing green for sustainable development without ditching economic growth

Global warming and other significant climatic changes arising from the accumulation of carbon dioxide and other greenhouse gases have placed great policy puzzles on whether to slow or not to slow gross domestic product (GDP) growth. This paper presents and estimates empirical models of growth using standard tools of growth empirics for 23 OECD countries over the period 1990–2017. The main objective is to examine the role of green energy consumption and investment on economic growth. Using the Method of Moments Quantile Regression (MMQR) with fixed effects, empirical results suggest that green energy consumption and investment—in the sense of renewable energy consumption and expenditure in renewable energy research and development (R&D)—have small, although positive effects on economic growth. These effects are heterogeneous, leading to asymmetric patterns over the conditional quantile distribution of per‐capita GDP with stronger effects found in the lower quantiles. The implication of our findings is that capacity utilization in green energy consumption and investment has not been developed to a viable level that will mitigate greenhouse effects and spur sustainable development in the long run.