How economic growth affected from technological innovation, CO2 emissions, and renewable energy consumption? Empirical analysis in G7 countries.

Abstract

Today's economically developed nations are also among the most advanced in energy production and consumption. In particular, the widespread implementation of renewable energy sources and the plethora of technological advancements supporting long-term prosperity stand out. The present research examines how carbon dioxide (CO2) emissions, technological advancements, and renewable energy sources affect economic expansion. Research and development (R&D) expenses are considered a proxy for technological progress. The analysis quantified the interplay between the factors using annual data for the G7 countries from 1996 through 2020. We examine the association between our variables using panel unit root tests, Pedroni cointegration tests, ARDL coefficient estimations, and Dumitrescu and Hurlin causality tests. The Pedroni cointegration test indicated that the variables are cointegrated. According to the ARDL method of computation, increasing levels of CO2 emissions are beneficial to long-term economic growth. However, improvements in renewable energy and technology dampen economic expansion. The economy's expansion and increased carbon dioxide emissions have a reciprocal relationship. The Dumitrescu and Hurlin causality test shows a uni-directional chain of events from CO2 emissions to technological improvements, from economic growth to the use of renewable energy, and from consumption of renewable energy to technological advances. Based on our research results, investing in renewable energy consumption is still suggested for long-term sustainable development and environmental protection. Also, directing technological innovations to renewable energy resources and facilities to reduce costs and improve efficiency is suggested.