The effect of renewable and non-renewable energy consumption on carbon dioxide emissions in OECD countries: A panel quantile regression approach

Abstract

The objective of this study is to examine the impact of renewable and non-renewable energy consumption, income, internet use and urbanization on CO2 emissions in 38 OECD countries during over the period 1995-2022 using the heterogeneous panel quantile regression technique. The study addresses the existing gap in the literature by analyzing the relationship between income and renewable energy, as well as the Environmental Kuznets Curve (EKC) at specified quantile levels. The findings show that the EKC is more dominant in countries with low CO2 emissions. Furthermore, the negative relationship between renewable energy consumption and CO2 emissions becomes considerably more significant in quantiles with higher CO2 emissions. The research clearly showed that while urbanisation is an important positive factor in increasing CO2 emissions, the use of the internet as an indicator of digitalization has a decreasing impact on CO2 emissions. Our study provides valuable insights for policymakers to identify effective strategies for renewable energy adoption, digitalization, and urbanization policies to ensure sustainable development while addressing environmental degradation. The results of this study indicate that in order to achieve green economic development, it is essential for governments to prioritize the utilization of renewable energy sources and the advancement of sustainable urbanization practices. Additional robustness checks based on MMQR and SIVQR estimations confirm the reliability of the empirical findings across alternative quantile estimation techniques.