A Panel Data Analysis of the Net Zero trajectory of Seven Industrialized Economies.  

Abstract

The study examines the correlation between energy consumption and the journey towards achieving net zero emissions in G7 nations spanning from 2002 to 2022. The study reveals a decline in environmental performance in certain G7 economies, primarily attributed to high carbon emissions from sectors such as manufacturing, construction, and transportation. The United States demonstrates the highest levels of emissions, with Japan and Germany following closely behind. The United Kingdom and Italy exhibit the lowest levels of emissions. The transportation industry plays a substantial role in the generation of carbon emissions. The emissions of methane resulting from energy consumption are also significant. Cross-sectional interdependence is present within the G7 nations, refuting cross-sectional independence. The Pesaran Panel Unit Root Test has confirmed the stationarity in all panels. The analysis using the 2SLS method uncovers a statistically significant and positive impact of emissions from the transport sector on total carbon emissions. The under-identification test and the Cragg-Donald Wald F statistic provide substantial evidence of strong identification, whereas the Sargan test rejects the null hypothesis in the over-identifying constraint test. The study recommends that G7 nations adopt customized policy measures, prioritizing non-fiscal strategies to efficiently mitigate carbon emissions and attain net zero objectives.. JEL classification: O50, Q56, P1