Do renewable energy sources improve air quality? Demand- and supply-side comparative evidence from industrialized and emerging industrial economies

Abstract

This study is an attempt to comparatively analyze the impact of renewable energy sources on air quality represented by particulate matter 2.5 concentrations utilizing panel data of 60 countries which are divided into two sub-panels industrialized economies and emerging industrial economies over the period 2010-2019. The study adopts both demand- and supply-side approaches and hence renewable sources are handled in two different structures, i.e., renewable energy consumption and production. Empirical results from both demand- and supply-side regressions strongly confirm the positive impact of renewable sources on air quality in all country groups, meaning that higher renewable energy production and consumption bring about improvement in air quality. In addition, this positive impact of renewables on air quality turned out to be higher in emerging industrial economies than that in industrialized ones. To be more precise, as all control variables are considered, a 10% increase in the production of renewable energy sources brings about a 0.66% improvement in air quality in industrialized economies while its impact is a value of 1.33% in emerging industrial economies. On the other hand, a 10% increase in consumption of renewable energy sources leads to a 0.62% improvement in air quality in industrialized economies and a 1.97% improvement in emerging industrial economies. As for control variables, industrialization gives rise to an increase in air pollution in all country groups, whereas economic growth and trade openness function as favorable factors for air quality. Although population density improves air quality in industrialized economies, it is found as one of the main pollutant factors in emerging industrial economies. Overall results proved that renewable sources improve air quality by reducing particulate matter 2.5 concentrations. Therefore, these countries, especially emerging industrial economies, should replace primitive energy sources like fossil fuels with renewables to bring down environmental degradation up to a reasonable level and increasingly continue to invest in renewable energy domain to reach their environmental sustainability targets. The study also provides some additional policy implications.