How renewable energy and service growth influence environmental quality: Evidence from a sustainable development perspective

Abstract

The present study inspects the relationships between the carbon dioxide (CO2) emissions, real GDP, renewable and non‐renewable energy consumption, as well as the service growth for top ten countries (TTC) in service activities. The empirical modeling used in the study involves the procedures of cointegration and tests of Granger causality to inspect the dynamic interaction between the variables during the period from 1980 to 2018. The results of the present study suggest that the variables are cross‐sectionally dependent. In addition, the variables appear to be cointegrated based on several tests. The long‐run outcomes revealed an inversed U‐shaped form between emissions‐GDP proving the validity of the environmental Kuznets curve assumption. The fully modified ordinary least squares and dynamic OLS estimates show that the non‐renewable energy and economic growth contribute to the increase of CO2 emissions, while service value‐added leads to decrease emissions. Furthermore, the renewable energy coefficient comes through as negative but insignificant for the selected panel. The TTC in service should stimulate the usage of renewable energy in various service events for following the path of sustainable development. Devising the investment plans associated with the use of renewable energies is quite essential for the advancement of the service sector leading to mitigating emissions portion.