Analyzing the role of renewable energy transition and industrialization on ecological sustainability: Can green innovation matter in OECD countries

Abstract

This research investigates the influence of renewable energy transition, industrialization, and green innovation on the ecological sustainability of selected OECD countries using annual data from 1990 to 2019. It also evaluates the moderating effects of industrialization and green innovation on ecological footprints. In doing so, we apply method of moments quantile regression that allows asymmetric impacts of energy transition and other variables at conditional quantiles of ecological footprint (EFP). The initial findings justify the presence of cross-sectional dependence, heterogeneous slope coefficients, panel cointegration, and stationarity properties of the data. The results from linear heterogeneous estimators confirm that clean energy transition and green innovations reduce EFP. In contrast, industrialization, economic growth, and foreign investment contribute to higher EFP. The outcomes through MMQR reveal that industrialization, economic growth, and foreign investment contribute to a higher EFP; however, their marginal contribution substantially varied at lower and higher quantiles of EF. Manifestly, the impact of the renewable energy transition is more substantial at higher quantiles and vice versa. The moderating effects of industrialization and green innovation implied that the integration of green innovation policy neutralizes negative fallouts of industrial processes. These results offer valuable policy recommendations.