Effect of wind and solar energy production, and economic development on the environmental quality: Is this the solution to climate change?

Abstract

The motivation of the present study is to evaluate the effect of wind and solar energy production and economic development on environmental quality in 43 countries covering the period of 1990–2017. The study uses annual data for real GDP, real trade, energy intensity, urbanization, foreign direct investment, ecological footprints, and wind and solar energy production. For econometric analysis, common correlated mean group (CCE-MG), cross-section-distributive lag (CS-DL), and cross-section autoregressive-distributive lag (CS-ARDL) approaches are employed. The outcomes show that real GDP has a significantly positive influence on ecological footprint. At the same time, wind and solar energy negatively and significantly influence ecological footprint. It is argued that a 1 % increase in wind and solar energy reduces ecological footprint by 3.1 % and 2.9 %, respectively. For policy recommendations, the study recommended that wind and solar energy resources may become more noticeable for electricity purposes despite rising investments in these energy resources. Indeed, the share of wind and solar energy production is limited and dominated by non-renewable energy resources, so low-carbon energy resources might be encouraged.