Role of solar-based renewable energy in mitigating CO2 emissions: Evidence from quantile-on-quantile estimation

Abstract

Renewable energy plays an important role in the modern economic growth paradigm. As a perpetual source, solar-based renewable energy has the ability to reduce CO2 emissions, which has been neglected in prior empirical studies. We have analyzed the asymmetric association between solar energy consumption and CO2 emissions in the top ten solar energy-consuming countries (Australia, Germany, Japan, Spain, Italy, USA, South Korea, UK, France, and China). Using data from 1991 to 2018, a novel methodology, ‘Quantile-on-Quantile (QQ)’, is applied. The results explore the mode of how quantiles of solar energy consumption asymmetrically affect the quantiles of CO2 emissions by providing an adequate framework to comprehend the overall dependence structure. The empirical findings demonstrate that solar energy consumption reduces CO2 emissions at different quantiles for all selected countries except France. The overall relationship is stronger at higher quantiles of CO2 emissions for various countries. The outcomes suggest that the intensity of asymmetric relationship in solar energy-CO2 emissions nexus differs with countries that need individual caution and attention for governments in formulating the policies connected to solar energy and the environment. Our empirical evidence also emphasizes that solar energy should be integrated for sustainable growth and environmental quality.