Environmental degradation, energy consumption and sustainable development: Accounting for the role of economic complexities with evidence from World Bank income clusters

Abstract

AbstractThe anthropogenic consequences of renewable and non‐renewable energy consumption, economic growth, and air transport have been assessed enormously in the literature. However, given the complexities in many economies of the world today, it is important to reassess the ecological concerns of these factors in light of the Environmental Kuznets Curve framework. Therefore, this current study investigates the global assessment using data from World Bank Development database from 1995 to 2016. Evidence from the method employed, sys‐GMM, revealed that the economic complexities index increases the carbon emission in low‐income groups while it significantly decreases the carbon emission for upper‐middle and high‐income groups. For the combined group, the EKC hypothesis holds, and ECI significantly hampers carbon emissions. For the other variables, it is worthy of note that (1) economic growth contributes to the high carbon contents across the income group especially for low‐income, upper‐middle‐income and high‐income group; (2) the effects of air transport on carbon emission is positive for lower‐middle‐income and high‐income group and negative for the upper‐middle‐income group; (3) the use of coal rents and energy use leads to high release of carbon contents across all the income groups; and (4) a significant increase in the utilization of energy leads to increase in carbon contents except for lower‐income group, it leads to a decrease. From this empirical assessment, vital energy policy directions are suggested.