Moving toward environmental mitigation in Algeria: Asymmetric impact of fossil fuel energy, renewable energy and technological innovation on CO2 emissions

Abstract

Algeria's recent economic shifts have caused its macroeconomic data to exhibit an abnormal distribution, requiring a nonlinear approach to examine the asymmetric impact of technological innovation (TI), fossil fuel energy (FFE), and renewable energy (RE) on CO2 emissions. This study employs the nonlinear autoregressive distributed lag (NARDL) model to analyze the asymmetric impact of these factors on CO2 emissions. Furthermore, Quantile Autoregressive Distributed Lag (QARDL) and Quantile Granger Causality (QGC) approaches are employed for robustness checks. The NARDL results indicate that positive shocks in TI decrease CO2 emissions, whereas negative shocks increase CO2 emissions. Positive shocks in RE also decrease CO2 emissions, while negative shocks have no effect. In contrast, positive shocks in FFE increase CO2 emissions, but negative shocks have an even stronger effect, resulting in almost double CO2 emissions over time. These findings confirm the presence of asymmetry, as positive and negative shocks in regressors clearly influence CO2 emissions in Algeria. Moreover, the results from the asymmetric causality analysis indicate that TI, RE, and FFE have a causal effect on CO2 emissions in Algeria. These results are consistent with the findings from the QARDL and QGC approaches. Therefore, it is crucial for Algeria to prioritize investment in sustainable technology and implement carbon-neutral energy policies to reduce its reliance on fossil fuel and encourage the use of cleaner energy sources. The shift towards a green energy sector requires policymakers to ensure that innovation aligns with development objectives.