The role of clean and unclean energy resources in inspecting N-shaped impact of industrial production on environmental quality: A case of high polluting economies

Abstract

This study is designed to probe the N-shaped consequence of industrial production on environmental quality from both traveling and production for the selected high-polluting country groups. The strength of this impact will be tested by considering renewable and polluting energy sources as controlled inputs in the proposed functional forms. The study utilizes a panel over an annual data series from 1990 to 2021 and uncovers the evidence of the N-formed influence of industrial production on carbon emission from traveling and production in long run. A similar is true for the short run but the coefficients are witnessed as insignificant. The study also reports the optimal level of industrial production where carbon emission from traveling and production turns out to be minimum in the selected country groups. For instance, at the values of industrial production such as 3.37 percent, 2.64 percent, and 3.31 percent, carbon emission from traveling turns out to be minimum while at the values of industrial production like 10.49 percent, 1.80 percent, and 3.34 percent, carbon emission from production becomes minimum. Beyond these optimal levels of output from industry, it will not remain environmentally friendly anymore. The findings further expose that renewable energy significantly improves environmental quality based on traveling and production in the long and short run while nonrenewable energy significantly deteriorates environmental quality based on traveling and production in long run but in the short run it only hurts environmental quality from production. According to the causality test, production from industry and environmental quality from traveling and production significantly cause each other while a feedback effect is witnessed between renewable energy and environmental quality from traveling and production, and similar results are found between fossil-based energy and environmental quality from traveling and production. Based on these findings, this research proposes that industrial output should not be stimulated beyond minimum threshold points as it will become harmful to the environment in the selected high-polluting economies. More investments in renewable energy-related activities will be expanded for improving environmental quality in the selected high-polluting country groups.