Does eco-innovation promote cleaner energy? Analyzing the role of energy price and human capital

Abstract

The transition from non-renewable energy sources to renewable energy sources is considered a key solution for global warming and a sustainable environment. The eco-innovation is regarding as one of the important sources of this transition, however, the rate of adaptation of renewable energy remains uncomfortably low. The ambiguity still exists whether eco-innovation increases or decreases energy consumptions in both aggregate and disaggregate level. Therefore, this study aims to investigate the effect of eco-innovation along with human capital, and trade openness on energy consumption at the aggregate (total) and disaggregate levels (renewable and non-renewable). For the above-mentioned objective, this study selects OECD countries' datasets between 1990 and 2017. The empirical investigation carries out using econometric techniques such as augmented mean group (AMG) and cross-section autoregressive distributed lag (CS-ARDL). The outcomes confirm that eco-innovation, human capital, and energy price play positive roles in increasing the consumption of renewable energy in the OECD region. In contrast, economic growth and trade openness still promote non-renewable energy consumption in this region. It is suggested that eco-innovation and high- skilled human capital growth be promoted to enhance the ratio of renewable energy consumption. This study further indicates that a sustainable environment could promote green growth through clean energy production and consumption.