Role of environmental regulations and eco-innovation in energy structure transition for green growth: Evidence from OECD

Abstract

How to effectively tackle the gigantic issue of climate change with policy instruments like environmental regulations is a highly relevant and complicated question. The constant performance monitoring of said policy instruments is much essential to formulate effective green growth strategies. Therefore, this study empirically explore the nexus between environmental regulations and green growth while considering green patents, eco-taxations, human capital index, renewable energy consumption, and economic growth with extended proxies of pollution emissions. Advance panel data estimation techniques are employed to produce robust results by solving the issues of endogeneity, heteroskedasticity, serial correlation, and cross-sectional dependency for selected OECD countries covering the time horizon from 1994 to 2020. The empirical findings confirm the positive role of environmental regulations to push for eco-innovations and pull for green growth while endorsing the double divided (DD) hypothesis. The findings contribute to environmental economics literature that such ecotaxes not only promote eco-friendly innovations with economic benefits but promote sustainability practices among individuals and corporations, recommend that OECD countries should focus to promote ecotaxes and eco-innovations as an efficient and effective policy instrument and share with less developed countries as a social responsibility. Besides this other important strategic policy recommendations were suggested to policymakers for the promulgation of sustainable development.