From brown to green: Are emerging countries moving in right direction? Testing the validity of LCC hypothesis

Abstract

Since the United Nations endorsed the sustainable development goals in 2015, emerging economies have faced several issues in meeting the objectives set by the sustainable development goals. Environmental degradation is one of the main issues faced by emerging countries. To overcome this issue and for attaining sustainable development goals, this study is the earliest attempt to examine the asymmetric influence of economic policy uncertainty, renewable energy consumption, and technological innovations on load capacity factor under the framework of the load capacity curve for E-7 countries during 1996–2019. The preliminary tests confirm the absence of data normality; hence, we use panel quantile regression. The findings of the study reveal the presence of a U-shaped load capacity curve hypothesis in E-7 countries including China, Indonesia, Russia, Brazil, Mexico, India, and Turkey. This finding depicts that at an earlier stage, gross domestic product has an adverse influence on environmental quality but after achieving its threshold level, a further increase in gross domestic product growth becomes helping to boost environmental quality. An increase in economic policy uncertainty leads to a decrease in load capacity factor while renewable energy consumption has a favorable impact on load capacity factor to enhance environmental quality. The negative impact of technological innovation is that prevailing technology patterns are not environmentally supportive. Relying on these empirical outcomes current study recommends significant policy measures to achieve the targets of sustainable development goals including SDG 07, SDG 08, SDG 09, and SDG 13 as renewable energy, economic growth, innovations, and climate action, respectively, in E-7 economies.