The Effect of Innovation and Renewable Energy on CO2 Emissions For Emerging Asian Countries

Abstract

This study investigates the impact of innovation and renewable energy consumption on CO2 emissions in seven emerging Asian countries using static panel data methods. The analysis employs Pooled Ordinary Least Squares (OLS), Fixed Effect (FE), and Random Effect (RE) models to estimate the relationships, with the most appropriate model selected based on the Breusch-Pagan LM test and the Hausman test. Our findings reveal that both GDP and urbanization significantly increase CO2 emissions, while GDP squared and renewable energy consumption significantly decrease emissions, supporting the Environmental Kuznets Curve (EKC) hypothesis. Diagnostic tests indicate the presence of heteroskedasticity and first-order autocorrelation, addressed using robust standard errors. The results underscore the dual role of economic growth and technological advancement in shaping environmental outcomes, highlighting the critical importance of sustainable development policies in emerging economies.