Clean energy consumption, economic growth, and environmental sustainability: What is the role of economic policy uncertainty?

Abstract

Undoubtedly, energy is indispensable to attain economic development; however, it also generates CO2 emissions, which are the dominant contributor to environmental deterioration and climate change. In this regard, clean energy can help to achieve both sustainable development and environmental sustainability since it comprises non-carbohydrate energy sources that do not or seldom generate emissions. Against this backdrop, this work considers economic policy uncertainty (EPU) and probes the impact of clean energy consumption on CO2 emissions in the third largest European economy France from 1987 to 2019 controlling urbanization and economic growth. Using the STIRPAT framework, the study employed the novel Augmented ARDL method that overcomes the limitations of the ARDL methods. The outcomes disclosed strong evidence of cointegration as F-statistics (overall and independent variables) and t-statistics of the dependent variables were significant. The long-run analysis revealed that EPU poses a threat to environmental sustainability by augmenting emissions levels. Surprisingly, clean energy consumption does not contribute to emissions reduction in the long-run. Economic growth boosts CO2 emissions, while urbanization is conducive to environmental quality supporting ecological modernization theory.The study detected causality from EPU to economic growth and emissions. Finally, based on the study outcomes, a policy framework is suggested to address the objectives of Sustainable Development Goal (SDG) 7 and 13.

The relationship between economic growth and environmental degradation: could West African countries benefit from EKC hypothesis?

“…Their findings were consistent with Akadiri et al ( 2019 ), Mensah et al ( 2019 ), Destek and Sinha ( 2020 ), Khan et al ( 2021 ), and Dimnwobi et al ( 2021 ) findings that found a positive and monotonic relationship between GDP and CO 2 . A recent study by Xue et al ( 2022 ) also found that GDP increases CO 2 in France. It is important to note that while these studies are consistent in their findings, they fail to explore the possible existence of the EKC hypothesis in their data.…”

“…The study provides evidence to support Wang and Su ( 2019 ) and Wang et al ( 2018 ) who found IND and URB upsurges in ED in China and India. Thus, pollution rises rapidly through industrialization and urbanization that focus on increasing material production and conversing of the earth's surface into urban places with little to its effects on the environment (Dasgupta et al 2002 ; Xue et al 2022 ). In terms of diagnostic statistics, the Wald chi 2 values are significant at the 1% level, suggesting that the distribution of the variables fits well with the CO 2 model.…”

“…As a result, we control for urbanization (URB) in this study. Scholars including Khan et al ( 2021 ), Dimnwobi et al ( 2021 ), and Xue et al ( 2022 ) support this theoretical argument for selecting URB as an ED determinant. Similarly, industrialization (IND) intensifies ED by industrial pollutants.…”

“…As a result, in our model, we controlled IND. The factors (IND, URB, and REC) jointly controlled in this work were derived from academics such as Wang et al ( 2018 ), Dong et al ( 2019 ), Wang and Su ( 2019 ), Majeed and Tauqir ( 2020 ), Rahman and Vu ( 2020 ), Ntarmah et al ( 2021 ), and Xue et al ( 2022 ).…”

“…Globally, research outcomes on growth-environmental relationships can be categorized into a monotonic relationship (Bekhet et al 2017 ; Mensah et al 2021 ; Xue et al 2022 ), U-shaped relationship (Destek and Sinha 2020 ; Xu et al 2020 ), inverted U-shaped relationship (Jebli et al 2016 ; Dogan and Inglesi-Lotz 2017 ; Sarkodie et al 2020 ), N or inverted N-shaped relationship (Halkos and Polemis 2017 ; Zeraibi et al 2021 ), bi-directional relationship (Gorus and Aydin 2019 ; Gyamfi et al 2021 ), and mixed outcomes in studies where the samples are decomposed into sub-samples (Ntarmah et al 2022 ). Table 1 summarizes growth-environmental studies in terms of sample/study area, period, methods, variables, and key findings.…”