Investigating the load capacity curve (LCC) hypothesis in leading emitter economies: Role of clean energy and energy security for sustainable development

Abstract

Our beneficent environment supplies us with ecosystem benefits, but these services have a maximum amount to be consumed before biocapacity shortage results. We need to put more faith in the replacements for ecosystem services if we want to return biocapacity to its previous state (i.e., biocapacity excess). Nevertheless, the demand for ecosystem services is rising as significant economies diversify their export bases. This raises the question of energy security because fossil fuels are running out owing to constant usage. The leading emitters (i.e., the USA and China) must rely on energy sources that are green and secure and refrain from the excessive use of ecosystem services if they hope to keep their pledges of reaching the Sustainable Development Goals (SDGs) by 2030. The current study examines the economic complexity index (ECI), energy security, and renewable energy affect the load capacity curve (LCC) hypothesis in this paper. We employ the data from 1998 to 2018 and the panel data methodologies CS-ARDL and PMG-ARDL to arrive at our empirical conclusions. The empirical results show that among the top 10 emitters in the world, the LCC hypothesis is only valid in the short and long run but validates the U-shaped relationship between GDP and LCF. The CS-ARDL results also show that export diversification, green energy, and energy security improve environmental quality across the analyzed regions. The PMG-ARDL robustness check results point to a similar conclusion. The top ten emitters must continue to work to switch from fossil fuels to clean and secure energy sources. It is strongly advised to shift in stages because doing so will less impact export diversification.