Relationship between energy intensity and CO₂ emissions: Does economic policy matter?

Abstract

In an environment with economic policy uncertainty, the policies of energy efficiency are probably compromised due to weak regulation measures. Inconsistent economic policies may lead to higher energy consumption, which damages the environment. However, works of literature are silent on the role of economic policy uncertainty in carbon emission and energy nexus. Hence, the study is an attempt to investigate the role of economic policy uncertainty in the relationship between energy intensity and carbon dioxide (CO 2) emissions in the United States by using annual data spanning from 1985 to 2017. A recent time series method proposed by Jordan and Philips (2018) is employed to get robust and consistent estimation results in the study. Empirical results reveal that (a) higher energy intensity contributes to pollution, (b) economic policy uncertainty adversely affects environmental quality, (c) economic policy uncertainty strengthens the detrimental effect of energy intensity on CO 2 emissions.

The pathway toward pollution mitigation: Does institutional quality make a difference?

“…Although they do not consider cross‐sectional dependence directly, due to their superior statistical power in estimating cointegration parameters, they are widely preferred by current studies in various fields of applied econometrics (Dawood & Francois, 2018; Ibhagui, 2019; Samargandi, 2018). Therefore, the FMOLS and DOLS are widely used econometric methods in the literature (Ali et al, 2019; Danish, Ulucak, & Khan, 2020a; Ozturk & Al‐Mulali, 2015). On the other hand, as a third estimator, Driscoll and Kraay (DK; 1998), DK regression is applied in the study since it is more effective if there are missing values in the data.…”

“…Despite the presence of small exceptions, a great majority of the literature agrees that renewables are beneficial for the environment (Ben Jebli & Ben Youssef, 2015;Bilgili et al, 2016;Danish et al, 2017;Dogan & Seker, 2016b;Dong et al, 2018;Mert & Bölük, 2016). Similarly, it is expected that institutional quality plays an important role in social, governance, and economic willingness to reduce environmental pollution (Sarkodie & Adams, 2018) because they may help in equal distribution of income and power and thereby improve environmental quality (Danish, Ulucak & Khan, 2020b). Strong institutions can handle and control the corruption that might directly or indirectly influence the environment (Wang, Danish, Zhang, & Wang, 2018 Recent econometric studies have raised the concern of the problem of CSD in panel data, stemming from common shocks, spatial dependence, and unobserved components (Choi, 2015;Pesaran, 2004;Westerlund & Basher, 2008).…”

Environmental quality and the role of economic policy uncertainty, economic complexity, renewable energy, energy intensity: the case of G7 countries

“…Sohail et al (2021) indicate that effects of the United States' monetary policy uncertainty on renewable and non-renewable energy consumption are asymmetric in direction and magnitude. Danish et al (2020) nd that not only does EPU adversely affect environmental quality in the United States it also strengthens the detrimental effect of energy intensity on carbon dioxide emissions. Yu et al (2021) explore the impact of EPU on the Chinese rms' carbon dioxide emissions as well as identify the channels through which EPU can affect rm emission intensity.…”

“…In contrast, renewable energy sources are cleaner, inexhaustible, and environmental friendly, and less affected by geopolitical risks (Adedoyin et al, 2021;Pata, 2020). Most research nd that renewable energy consumption reduces carbon dioxide emissions and plays an important role in achieving sustainable development goals (Adams and Acheampon, 2019;Khan et al, 2020;Vural, 2020;Swain and Karimu, 2020;Wang et al, 2020). On the role of energy intensity, lowering the energy intensity or increasing the energy e ciency is considered a major solution to reducing carbon dioxide emissions (Neagu, 2019;Talaei et al, 2018;Worrell et al, 2001).…”

“…Yu et al (2021) speculate that the EPU can in uence rm emissions through three channels, including innovation, share of fossil fuels, and energy intensity. However, the relationship between EPU and environmental quality has been empirically investigated by a limited number of research on international level (Adedoyin et al, 2021;Anser et al, 2021;Pirgaip and Dincergok, 2020), national level (Adedoyin and Zakari, 2020;Danish et al, 2020;Yu et al, 2021), and sectoral level (Jiang et al, 2019).…”