Renewable energy, inequality and environmental degradation

Abstract

The connection between income inequality and environmental degradation remains a topic of persistent debate, marked by inconsistencies in both theoretical and empirical studies. This study offers a novel contribution to this discourse by investigating the simultaneous influences of renewable energy and income inequality on environmental degradation. Utilizing data from 158 nations from 2000 to 2017, our research reveals a crucial moderating role of renewable energy in the nexus between income inequality and environmental degradation. The study's key finding is that the impact of income inequality on environmental degradation is contingent on the level of renewable energy development. In scenarios with limited renewable energy, income equality leads to increased environmental degradation. However, when renewable energy is more developed, income equality contributes to reducing environmental degradation. This novel insight suggests that renewable energy development can mitigate the trade-off between pursuing income equality and environmental sustainability, thereby enabling their simultaneous achievement. The research also highlights that a more equitable income distribution enhances the environmental benefits of renewable energy. Further analysis demonstrates the significant role played by household consumption behavior and social norms in shaping this phenomenon. By adding these new dimensions to the existing literature, the study significantly enriches the understanding of the complex interplay among economic factors, renewable energy, and environmental sustainability.