A path towards green revolution: How do competitive industrial performance and renewable energy consumption influence environmental quality indicators?

Abstract

This paper probes the effectiveness of competitive industrial performance (CIP) and renewable energy in enhancing load capacity factor in top-10 CIP economies for the period 1990–2018. We run panel econometric techniques that address cross-sectional dependence, endogeneity and heterogeneity to provide policy recommendations with the applications of industry, innovation, and infrastructure (SDG 9), which is linked to affordable and clean energy (SDG 7) and climate action (SDG 13). In the empirical analysis, two different environmental quality indicators such as CO2 emissions and load capacity factor are used. While cointegration between variables cannot be detected in the emissions model, evidence for the existence of cointegration is presented in the load capacity factor model. The findings in the paper suggest that economic growth and competitive industrial performance adversely impact environmental quality, while renewable energy consumption and human capital can improve load capacity factor. The result shows that human capital and renewable energy consumption can be strong tools for stimulating load capacity factor in top-10 CIP economies. Countries with high competitive industrial performance need to return to a green economy without losing their competitiveness.