A path towards environmental sustainability: exploring the effects of technological innovation and investment freedom on load capacity factor

Abstract

ABSTRACT This study examines the impact of investment freedom, technological innovation, renewable energy, and economic growth on load capacity factor (LCF) within the context of Sustainable Development Goals (SDGs) 7 and 13 for a group of high investment freedom countries (Luxembourg, Germany, Austria, Australia, Canada, Denmark, Netherlands, United Kingdom, Chile, Singapore, New Zealand, United States of America, Belgium, Finland, Uruguay, Latvia, Spain, Sweden, and Switzerland). Furthermore, this research assesses the impacts of achieving carbon neutrality by 2030. The data set covers the years between 1995 and 2019. Moreover, the validity of the load capacity curve (LCC) hypothesis is analyzed in all countries. Long-run coefficients are estimated using the Regularized Common Correlated Effects (rCCE) estimator, and the robustness analysis is performed using Common Correlated Effects (CCE) estimators. The overall assessment of the panel reveals that the LCC hypothesis is invalid in the selected nations, with the exception of Belgium. Other findings indicate that investment freedom reduces the LCF for New Zealand. However, investment freedom increases LCF, improving environmental quality in Latvia. Technological innovation decreases LCF for Singapore and increases it for Germany. Renewable energy increases LCF for the UK and Spain. Finally, policy implications for improving environmental quality are discussed.