Environmental effect of clean energy research and development investments: Evidence from Japan by using load capacity factor

Abstract

In environmental economics, the load capacity factor has recently been empirically studied to demonstrate how human actions degrade the environment and how nature compensates for this damage. Therefore, the improvement of the load capacity factor by countries is a critical indicator for achieving Sustainable Development Goals. The study therefore examines the environmental effects of research and development investments in renewable and nuclear energy. In doing so, the study covers Japan; applies Fourier-based time series models (i.e., FMOLS as the base model and DOLS and CCR for the robustness); and uses data between 1974 and 2018. The estimation results present that (i) renewable energy research and development investments support the environment; (ii) economic growth and financial development degrade the environment; and (iii) nuclear energy research and development investments have no effect on the environment. Thus, the study recommends that Japan should contribute to the achievement of the Sustainable Development Goals by concentrating its research and development investments on renewable energy sources instead of nuclear energy.