Consumption-based carbon emissions and International trade in G7 countries: The role of Environmental innovation and Renewable energy
Zeeshan Khana b, Shahid Alic d, Muhammad Umare f, Derviş Kırıkkalelig h, Zhilun Jiaoi j✉
- aSchool of Economics and Management (SEM), Tsinghua University. Electronic address: Zeeshan.17@sem.tsinghua.edu.cn
- bSchool of Economics and Management (SEM), Tsinghua University
- cDepartment of Economics and Development Studies, University of Swat, Khyber Pakhtunkhwa PK 19130, Pakistan. Electronic address: shahid@uswat.edu.pk
- dDepartment of Economics and Development Studies, University of Swat, Khyber Pakhtunkhwa PK 19130, Pakistan
- eDepartment of Management Sciences and Engineering, School of Business, Qingdao University, Qingdao 266061, China. Electronic address: umar@qdu.edu.cn
- fDepartment of Management Sciences and Engineering, School of Business, Qingdao University, Qingdao 266061, China
- gEuropean University of Lefke, Faculty of Economic and Administrative Sciences, Department of Banking and Finance, Lefke, Northern Cyprus, TR-10 Mersin, Turkey. Electronic address: dkirikkaleli@eul.edu.tr
- hEuropean University of Lefke, Faculty of Economic and Administrative Sciences, Department of Banking and Finance, Lefke, Northern Cyprus, TR-10 Mersin, Turkey
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Abstract
The role of a reliable carbon emissions measurement is important for devising a relevant climate policy to deals with environmental problems. Based on trade adjusted statistics of carbon emissions, a relevant climate policy response can be provided, especially following the conference of Paris (COP, 21). To explore the unidentified determinants of CO2 emissions in G7 countries from 1990 to 2017, this study uses second-generation panel co-integration methodologies. Results of P&Y's slope heterogeneity test and Pesaran's CD test confirm the existence of correlation among cross-sectional units and slope heterogeneity across countries. The results confirm a stable long-run relationship among CO2 emissions, trade, income, environmental innovation and renewable energy consumption. In the long run, imports and income enhance consumption-based carbon emissions, while exports, environmental innovation and renewable energy consumption are helpful in abating consumption-based CO2 emissions. The results are also reconfirmed by Augmented Mean Group (AMG) and Common Correlated Effect Mean Group (CCEMG) methods. Based on the results of the Dumitrescu and Hurlin (2012) Granger causality test, it is argued that any policy to target exports, imports, income and environmental innovation significantly changes CO2 emissions. On the contrary, any policy to support environmental degradation does not affect these variables. Moreover, any policy to target renewable energy sources significantly affects consumption-based CO2 emissions and vice versa. This might lead the policymakers to adopt strategies that are eco-friendly such as the deployment of renewable energy and environmental innovation to attain sustainable environment.
TL;DRTo explore the unidentified determinants of CO2 emissions in G7 countries from 1990 to 2017, this study uses second-generation panel co-integration methodologies and confirms a stable long-run relationship amongCO2 emissions, trade, income, environmental innovation and renewable energy consumption. (Semantic Scholar)