Does environment-biased technological progress reduce CO2 emissions in APEC economies? Evidence from fossil and clean energy consumption.

Abstract

Environment-biased technological progress plays a critical role in carbon reduction, while the association among environment-biased technological progress, energy consumption, and carbon emissions has not been paid enough attention. Working with a unique spatial panel dataset of APEC economies spanning the 2000-2017 period, we employed the nonspatial panel model and the spatial panel model to investigate the role of fossil energy (FE) and clean energy (CE) consumption in carbon dioxide (CO2) abatement through environment-biased technological progress (EBTP). We decomposed EBTP into both emission-reducing biased technological progress (ErBTP) and energy-saving biased technological progress (EsBTP). The results show that the direct effect of EBTP on CO2 emissions was significantly negative and that the direct effect of ErBTP was significantly larger than that of EsBTP. EBTP reduced CO2 emissions through CE consumption, whereas it increased CO2 emissions through FE consumption, that is, EBTP had a "backfire effect" on FE consumption. More into detail, ErBTP had a larger effect on CO2 emissions in developing economies, while EsBTP played a more important role in developed economies. Furthermore, the results of the robustness test were consistent with our findings. Finally, several policy options were suggested to reduce CO2 emissions in APEC economies.