Internalizing negative environmental externalities through environmental technologies: The contribution of renewable energy in OECD countries

Abstract

Due to human achievements, global environmental threats are becoming more complex and interconnected, affecting people, ecosystems, and economies worldwide. Using remittances, economic growth, and trade openness as indicators, we examine the impact of environmental technology and renewable energy consumption on CO2 emissions for OECD countries from 1994 to 2019. This study utilizes advanced econometric methodologies of the second generation to develop a comprehensive empirical analysis. We find that environmental technology, renewable energy, and remittances are statistically negatively related to CO2 emissions of selected OECD countries. On the other hand, economic growth and trade openness positively influence those emissions. These findings suggest that environmental technology, renewable energy, and remittances positively impact the environment. Conversely, economic growth and trade exposure deteriorate it. As a result of this empirical evidence, green energy should be generated, or endangered species should be monitored. The key to reducing air pollution is reducing our reliance on imported fuel and diversifying our energy supply. Moreover, integrating economic and sustainability goals produces concrete, measurable results across both pillars while considering the social consequences of greening economies. There is a discussion of limitations and future directions.