Examining the (non)symmetric environmental quality effect of material productivity and environmental-related technologies in Iceland

Abstract

This study considers the carbon neutrality 2040 ambition of Iceland to examine the role of raw material productivity, environmental-related technologies, and export intensity (components of the 48 elements of the country’s Climate Action Plan (CAP)) in navigating the country's environmental sustainability pathway. By employing symmetric and asymmetric empirical approaches with dataset that span over 1990–2019, the result reveals that a positive shock to raw material productivity accounts for a decline in GHG emission in both short- and long-run, thus aiding the pathway toward green productivity in the country. While GHG emission is impacted negatively by a positive shock in environmental-related technologies, the finding reveals a surge in GHG emission arising from a negative shock in environmental-related technologies in all the examined models. However, it is revealed that a positive shock to GDP spurs GHG emissions especially in the long run while a negative change in GDP impact hinders the surge in GHG emissions. This evidence poses more question about the country’s pathway to sustainable growth. Interestingly, the result further posits that a positive shock to export intensity enhances environmental sustainability by promoting a decrease in GHG emissions. Meanwhile, a negative shock to export intensification shows a contrary effect. In a compelling manner, the results of the symmetric analysis corroborate the above-mentioned asymmetric evidence. Thus, the result from this investigation brings the Icelandic’s CAP performance under scrutiny alongside offering further recommendation to attaining improved performance.