The nexus between economic growth, renewable energy and ecological footprint: An empirical evidence from most oil-producing countries

Abstract

Although the impact of fossil fuel consumption is known worldwide, oil-producing countries stay away from using renewable energy sources due to commercial concerns, which causes an increase in global warming. We investigated the relationship between economic growth, renewable energy consumption, and ecological footprint in the oil-producing USA, Russia, Saudi Arabia, Canada, China, Brazil, Kuwait, and Nigeria for 1999–2017 using a dynamic panel data analysis and panel causality analysis. Our motivation was to demonstrate the oil-producing countries' growing ecological footprint/environmental pollution and the influence on global warming. Our objective is to analyze how economic growth and renewable energy consumption contribute to the ecological footprint in countries whose growth is based on oil production. We employed a dynamic Two-Step System Generalized Method of Moments test and Dumitrescu-Hurlin Heterogenous Panel Causality Test. Our findings demonstrate a significant effect of economic growth on ecological footprint, confirming the Pollution Haven Hypothesis and no significant effect of renewable energy consumption on ecological footprint. Future researchs based on our analysis may determine the optimum distribution of conventional and renewable energy production that guarantees economic growth while reducing global warming. The first contribution of our study to the literature is to examine the related nexus through dynamic panel data analysis, unlike the studies using static analysis. The second contribution is to identify the damage done to our planet by oil-producing countries' efforts to maintain their economic growth despite environmental degradation. In other words, by combining these two, our study's contribution is identifying the Pollution Haven Hypothesis by dynamic and causality analyses for oil-producing countries. Our findings demonstrate that; a) renewable energy consumption does not influence and is not a cause of the ecological footprint, b) economic growth is a cause and has an influence on the ecological footprint for most oil-producing countries. In our test results, it has been found out that a 1% increase in economic growth will increase the ecological footprint by 0.02828%.