Carbon Dioxide, Nitrous Oxide, and Methane: What Types of Greenhouse Gases Are Most Affected by Green Investments and Renewable Energy Development?

Abstract

The article aims to analyze the impact of green investments and the development of renewable energy on greenhouse gas emissions based on 223 countries in 2011–2021. The information base is the International Renewable Energy Agency, Our World in Data, Climate Policy Initiative, and FTSE Russell. Correlation analysis was used to check the data multicollinearity, multivariate regression analysis with stepwise variable entry—to formalize functional relationships. All variables characterizing the dynamics of green investments and the development of alternative energy, the number of annual investments in off-grid renewable energy has the largest impact on the amount of CO2 and N2O. Thus, an annual investment increase of USD 1 million leads to a CO2 emission increase of 4.5 kt and an N2O emission increase of 0.272 kt. Simultaneously, the green economy’s market capitalization level has the largest impact on the amount of CH4. In this case, a capitalization increases of USD 1 trillion leads to a CH4 emission increase of 129.53 kt. The dynamics of renewable energy development have a statistically significant effect on only one of the three studied greenhouse gases—CO2 emissions. Here, 1 MW growth of an absolute increase in off-grid renewable energy capacity leads to a 1171.17 kt reduction of CO2 emissions. Checking input data for lags confirmed a time lag of one year between the level of green investments and the level of greenhouse gas emissions. That is, the impact of green investments on the level of greenhouse gas emissions is delayed by one year. The results of regression models taking into account lags confirmed that an increase in the level of green investments has a positive effect on reducing the level of greenhouse gas emissions (an increase in off-grid renewable energy annual investments of USD 1 million leads to a decrease in CO2 of 1.18 kt and N2O of 1.102 kt; the increase in green economy market capitalization of USD 1 trillion leads to a decrease in CH4 emissions of 0.64 kt).

Environmentally related taxes and their influence on decarbonization of the economy

“…The impact of renewable energy on greenhouse gas emissions is an urgent issue. Kwilinski et al (2024) used regression models with lags to confirm that an increase in annual investment in off-grid renewable energy by USD 1 million leads to a decrease in CO2 by 1.18 kt and N2O by 1.102 kt. For the global development of renewable energy technologies, governments must understand their impact on changing the scale of environmental pollution.…”