Evaluating the impact of technological innovation and energy efficiency on load capacity factor: empirical analysis of India

Abstract

The determinants of environmental degradation have been investigated many times by utilizing carbon dioxide emissions and/or ecological footprint. However, these traditional environmental degradation indicators do not consider the supply side of environmental problems. Therefore, this study focuses on the dynamic influence of financial development, energy efficiency, economic growth, and technological innovation on environmental degradation in India through the load capacity factor, including both supply and demand sides of environmental problems. For that purpose, the recently developed dynamically simulated autoregressive distributed lag (ARDL) method is employed using the annual time-series data extending from 1980-2020. The dynamically simulated ARDL results demonstrate that financial development, economic growth, and technological innovation have a dynamic adverse impact on the load capacity factor, whereas energy efficiency has a positive dynamic influence on environmental quality. In addition, the results support the validity of the environmental Kuznets curve hypothesis as the negative effect of economic growth on environmental quality decreases over time. Based on the study findings, policy recommendations are provided for India. Finally, this study utilizing load capacity factor as an indicator for environmental quality will provide new topics in exploring the determinants of environmental degradation.