The role of ICT, R&D spending and renewable energy consumption on environmental quality: Testing the LCC hypothesis for G7 countries

Abstract

Intense anthropogenic air, water, and soil pollution motivates researchers and this study to analyze the determinants of pollution and propose solutions to ensure environmental sustainability. By using the load capacity factor to examine the factors that determine environmental quality and by proposing the load capability curve (LCC) hypothesis, this study adds to the existing environmental literature. The load capacity factor allows for comprehensive environmental quality monitoring of environmental quality by comparing ecological footprint and biocapacity. This study evaluates the load capacity factor in relation to information and communication technology (ICT), research and development (R&D), renewable energy consumption, and income. In doing so, the study applies the cross-sectionally augmented autoregressive distributed lag estimator and the Durbin-Haussman cointegration test from 1986 to 2017 for the G7 countries. The empirical results show that renewable energy, R&D spending, and ICT positively affect environmental quality. Moreover, since there is a U-shaped relationship between environmental quality and income, this study confirms the LCC hypothesis, implying that income initially deteriorates ecological conditions but helps improve environmental quality after crossing a certain threshold. The bottom turning point is around US$ 46660–47909, where G7 countries such as Canada, Germany, Japan, and the United States have reached income levels that improve load capacity factor. Based on the overall results, G7 governments should promote economic development, disseminate renewable energy, direct R&D spending to areas of greatest benefit, and support the deployment of green ICT infrastructure as part of their environmental policies.