Investigating environmental quality among G20 nations: The impacts of environmental goods and low-carbon technologies in mitigating environmental degradation

Abstract

Environmental goods and low-carbon technologies have long been identified as having the potential to drive long-term economic progress without compromising environmental quality. However, their exact role in mitigating environmental degradation are yet to be unravelled. In addressing this shortfall, the extant literature relied on research funding and patent application as proxies for green technologies. Having established the weaknesses in the use of these variables as proxies for green technologies, this study explored the role of trade in environmental goods and low-carbon technologies in boosting environmental quality among G20 nation using a panel dataset from 1994 to 2018. The study employed the Method of Moment quantile regression for the model estimation and the Ridge regression, Discroll-Kraay standard error, and the Newey-West standard error estimators to test the robustness of our findings. Our findings indicate that whereas environmental goods promote environmental quality, low-carbon technologies decrease same. Also, the study found economic growth to exert an aggravating effect on environmental quality, while foreign direct investments, natural resource rents, human capital development, and renewable energy consumption exert positive influence on environmental quality. Based on the findings of the study, G20 nations are encouraged to improve green market structures to improve the trade in environmental goods and low-carbon technologies. Also the share of renewable energy sources in the overall energy basket must be improved to help improve environmental quality.

Keywords

Environmental quality / Environmental goods / Low-carbon technology / G20 nations

References

[1] Abid A., Mehmood U., Tariq S., Haq Z.U., 2022. The effect of technological innovation, FDI, and financial development on CO₂ emission: evidence from the G8 countries. Environmental Science and Pollution Research (29), 11654-11662.

[2] Ahmad M., Ahmed Z., Bai Y., Qiao G., Popp J., Oláh J., 2022. Financial inclusion, technological innovations, and environmental quality: Analyzing the role of green openness. Frontiers in Environmental Science 80.

[3] Ali E.B., Amfo B., 2021. Comparing the values of economic, ecological and population indicators in high- And low-income economies. Economy of Region 17(1), 72-85. https://doi.org/10.17059/EKON.REG.2021-1-6.

[4] Ali E.B., Radmehr R., Shayanmehr S., Gyamfi B.A., Anufriev P.V., 2023a. The role of technology innovation, R&D, and quality governance in pollution mitigation for EU economies: fresh evidence from method of moment quantile regression. International Journal of Sustainable Development and World Ecology 30(3), 1-18. https://doi.org/10.1080/13504509.2022.2134939.

[5] Ali E.B., Shayanmehr S., Radmehr R., Amfo B., Awuni j.A., Gyamfi B. A., Agbozo E., 2023b. Exploring the impact of economic growth on environmental pollution in South American countries: how does renewable energy and globalization matter? Environmental Science and Pollution Research 30, 15505-15522. https://doi.org/10.1007/s11356-022-23177-4.

[6] Alvi S., Ahmad I., Rehman A., 2023. Trade of environmental versus non-environmental goods and carbon emissions in high and middle-income countries. Environmental Science and Pollution Research 1-13.

[7] Awan A., Alnour M., Jahanger A., Onwe J.C., 2022. Do technological innovation and urbanization mitigate carbon dioxide emissions from the transport sector?. Technol. Soc. 71, 102128. https://doi.org/10.1016/j.techsoc.2022.102128.

[8] Bai J., Han Z., Rizvi S.K.A., Naqvi B., 2023. Green trade or green technology? The way forward for G-7 economies to achieve COP 26 targets while making competing policy choices. Technological Forecasting and Social Change 191, 122477.

[9] Barisa A., Rosa M., Laicane I., Sarmins R., 2015. Application of low-carbon technologies for cutting household GHG emissions. Energy Procedia 72, 230-237.

[10] Bilal A., Li X., Zhu N., Sharma R., Jahanger A., 2022. Green technology innovation, globalization, and CO₂ emissions: Recent insights from the OBOR economies. Sustainability (Switzerland) 14(1), 236. https://doi.org/10.3390/su14010236.

[11] Can M., Ahmed Z., Mercan M., Kalugina O.A., 2021. The role of trading environment-friendly goods in environmental sustainability: Does green openness matter for OECD countries? Journal of Environmental Management 295, 113038.

[12] Can M., Ben Jebli M., Brusselaers J., 2022. Can green trade save the environment? Introducing the Green (Trade) Openness Index. Environmental Science and Pollution Research 29(29), 44091-44102.

[13] Dijkstra B.R., Mathew A.J., 2016. Liberalizing trade in environmental goods and services. Environmental Economics and Policy Studies 18, 499-526.

[14] Duzan H., Shariff N.S.B.M., 2015. Ridge regression for solving the multicollinearity problem: review of methods and models. Journal of Applied Science 15(3), 392-404.

[15] European Environmental Agency, 2016. Electric vehicles in Europe, https://doi.org/10.2800/100230.

[16] Fang Z., 2023. Assessing the impact of renewable energy investment, green technology innovation, and industrialization on sustainable development: A case study of China. Renewable Energy 205, 772-782.

[17] Fuinhas J.A., Koengkan M., Leitão N.C., Nwani C., Uzuner G., Dehdar F., Relva S., Peyerl D., 2021. Effect of battery electric vehicles on greenhouse gas emissions in 29 European Union countries. Sustainability (Switzerland) 13(24), 13611.

[18] Gao P., Wang Y., Zou Y., Su X., Che X., Yang X., 2022. Green technology innovation and carbon emissions nexus in China: Does industrial structure upgrading matter? Frontiers in Psychology. 13, 951172. https://doi.org/10.3389/fpsyg.2022.951172.

[19] Gujarati D.N., 2022. Basic Econometrics. Prentice Hall.

[20] Gyamfi B.A., Onifade S.T., Erdoğan S., Ali E.B., 2023. Colligating ecological footprint and economic globalization after COP21: Insights from agricultural value-added and natural resources rents in the E7 economies. International Journal of Sustainable Development & World Ecology 30(5), 500-514. https://doi.org/10.1080/13504509.2023.2166141.

[21] Ha L.T., 2023. Trade values in environmental commodities and environment performance: Insights from global database. Management of Environmental Quality: An International Journal 34, 670-703.

[22] Habib Y., Xia E., Hashmi S.H., Zahoor A., 2021. The nexus between road transport intensity and road-related CO₂ emissions in G20 countries: an advanced panel estimation. Environmental Science and Pollution Research 28, 58405-58425.

[23] Habiba U.M.M.E., Xinbang C., Anwar A., 2022. Do green technology innovations, financial development, and renewable energy use help to curb carbon emissions?. Renewable Energy19 3, 1082-1093.

[24] Hu X., Pollitt H., Pirie J., Mercure J.-F., Liu J., Meng J., Tao S., 2020. The impacts of the trade liberalization of environmental goods on power system and CO₂ emissions. Energy Policy 140, 111173.

[25] Huang Y., Villanthenkodath M.A., Haseeb M., 2023. The nexus between eco‐friendly technology and environmental degradation in India: Does the N or inverted N‐shape load capacity curve (LCC) hypothesis hold? Natural Resources Forum 47 (2), 276-297.

[26] Huo W., Zaman B.U., Zulfiqar M., Kocak E., Shehzad K., 2023. How do environmental technologies affect environmental degradation? Analyzing the direct and indirect impact of financial innovations and economic globalization. Environmental Technology and Innovation 29, 102973. https://doi.org/10.1016/j.eti.2022.102973.

[27] Hussain M., Abbas A., Manzoor S., Ye B., 2023. Linkage of natural resources, economic policies, urbanization, and the environmental Kuznets curve. Environmental Science and Pollution Research 1451-1459. https://doi.org/10.1007/s11356-022-22339-8.

[28] International Energy Agency, 2022. Global EV Outlook 2022 Securing Supplies for An Electric Future.

[29] Jin S., Wang W., Qalati S.A., Zhang C., Lu N., Zhu G., Wu J., 2022. Can low-carbon technological innovation reduce haze pollution?—based on spatial econometric analysis. Frontiers in Environmental Science 10, 893194.

[30] Khan Z., Ali S., Umar M., Kirikkaleli D., Jiao Z., 2020. Consumption-based carbon emissions and international trade in G7 countries: the role of environmental innovation and renewable energy. Science of the Total Environment 730, 138945.

[31] Kirikkaleli D., Sofuoğlu E., Ojekemi O., 2023. Does patents on environmental technologies matter for the ecological footprint in the USA? Evidence from the novel Fourier ARDL approach. Geoscience 14 (2023), 101564.

[32] Li Z., Zhou Y., Zhang C., 2022. The impact of population factors and low-carbon innovation on carbon dioxide emissions: a Chinese city perspective. Environmental Science and Pollution Research 29(48), 72853-72870.

[33] Lisha L., Mousa S., Arnone G., Muda I., Huerta-Soto R., Shiming Z., 2023. Natural resources, green innovation, fintech, and sustainability: A fresh insight from BRICS. Resources Policy 80, 103119.

[34] Liu H., Zhang J., Lei H., 2022. Do imported environmental goods reduce pollution intensity? The end use matters. Energy Economics 112, 106130.

[35] Liu H., Zhang J., Huang H., Wu H., Hao Y., 2023. Environmental good exports and green total factor productivity: Lessons from China. Sustainable Develoment 31(3), 1681-1703. https://doi.org/10.1002/sd.2476.

[36] Mao X., Liu H., Gui J., Wang P., 2023. Toward inclusive list-making for trade liberalization in environmental goods to reduce carbon emissions. Geography and Sustainability 4, 200-212.

[37] Mehmood U., 2022. Renewable energy and foreign direct investment: does the governance matter for CO2 emissions? Application of CS - ARDL. Environmental Science and Pollution Research 29, 19816-19822. https://doi.org/10.1007/s11356-021-17222-x.

[38] Mohammadi S., 2022. A test of harmful multicollinearity: A generalized ridge regression approach. Communications in Statistics-Theory and Methods 51(3), 724-743.

[39] Ni Z., Yang J., Razzaq A., 2022. How do natural resources, digitalization, and institutional governance contribute to ecological sustainability through load capacity factors in highly resource-consuming economies?. Resources Policy 79, 103068.

[40] OECD, 2021. Carbon Pricing in Times of COVID-19: What Has Changed in G20 Economies? OECD, Paris,

[41] Ofori E.K., Onifade S.T., Ali E.B., Alola A.A., Zhang J., 2023. Achieving carbon neutrality in post COP26 in BRICS, MINT, and G7 economies: The role of financial development and governance indicators. Journal of Cleaner Production 387, 135853. https://doi.org/10.1016/j.jclepro.2023.135853.

[42] Omer A.M., 2008. Focus on low carbon technologies: The positive solution. Renewable and Sustainable Energy Reviews 12(9), 2331-2357.

[43] Pata U.K., 2021. Do renewable energy and health expenditures improve load capacity factor in the USA and Japan? A new approach to environmental issues. European Journal of Health Economics 22(9), 1427-1439. https://doi.org/10.1007/s10198-021-01321-0.

[44] Pata U.K., Isik C., 2021. Determinants of the load capacity factor in China: A novel dynamic ARDL approach for ecological footprint accounting. Resources Policy 74, 102313.

[45] Pata U.K., Samour A., 2022. Do renewable and nuclear energy enhance environmental quality in France? A new EKC approach with the load capacity factor. Progress in Nuclear Energy 149, 104249. https://doi.org/10.1016/j.pnucene.2022.104249.

[46] Radmehr R., Henneberry S.R., Shayanmehr S., 2021. Renewable energy consumption, CO₂ emissions, and economic growth nexus: a simultaneity spatial modeling analysis of EU countries. Structural Change and Economic Dynamics 57, 13-27.

[47] Radmehr R., Shayanmehr S., Ali E.B., Ofori E.K., 2022. Exploring the nexus of renewable energy, ecological footprint, and economic growth through globalization and human capital in G7 economics. Sustainability 14, 12227.

[48] Rahman M.M., Alam K., 2022. Impact of industrialization and non-renewable energy on environmental pollution in Australia: Do renewable energy and fi nancial development play a mitigating role? Renewable Energy 195, 203-213. https://doi.org/10.1016/j.renene.2022.06.012.

[49] Ramzan M., Abbasi K. R., Salman A., Dagar V., Alvarado R., Kagzi M., 2023. Towards the dream of go green: An empirical importance of green innovation and financial depth for environmental neutrality in world's top 10 greenest economies. Technological Forecasting and Social Change 189, 122370.

[50] Saqib N., Usman M., Radulescu M., Sinisi C.I., Secara C.G., Tolea C., 2022. Revisiting EKC hypothesis in context of renewable energy, human development and moderating role of technological innovations in E-7 countries? Frontiers in Environmental Science 10, 1077658. https://doi.org/10.3389/fenvs.2022.1077658.

[51] Schreiber-Gregory D.N., 2018. Ridge regression and multicollinearity: An in-depth review. Model Assisted Statistics and Applications 13(4), 359-365.

[52] Shakib M., Yumei H., Rauf A., Alam M., Murshed M., Mahmood H., 2022. Revisiting the energy-economy-environment relationships for attaining environmental sustainability: evidence from Belt and Road Initiative countries. Environmental Science and Pollution Research 29(3), 3808-3825.

[53] Shan S., Genç S.Y., Kamran H.W., Dinca G., 2021. 2022. Role of green technology innovation and renewable energy in carbon neutrality: A sustainable investigation from Turkey. Journal of Environmental Management 294, 113004.

[54] Sharif A., Saqib N., Abdul S., Khan R., 2022. Nexus between green technology innovation, green financing, and CO2 emissions in the G7 countries: The moderating role of social globalisation. Sustainable Development 30(6), 1934-1946. https://doi.org/10.1002/sd.2360.

[55] Sheraz M., Deyi X., Ahmed J., Ullah S., 2021. Moderating the effect of globalization on financial development, energy consumption, human capital, and carbon emissions: evidence from G20 countries. Environmental Science and Pollution Research 28, 35126-35144.

[56] Sun D., Kyere F., Kwasi A., Dennis S., Naana A., Gyamea Y., 2022. An investigation on the role of electric vehicles in alleviating environmental pollution: evidence from five leading economies. Environmental Science and Pollution Research 30, 18244-18259. https://doi.org/10.1007/s11356-022-23386-x.

[57] Tariq G., Huaping S., Imad A., Amjad A.P., Muhammad S.K, Mustafa M.R., Abdullah M., Qasim S., 2022. Influence of green technology, green energy consumption, energy efficiency, trade, economic development and FDI on climate change in South Asia. Scientific Reports 12(1),16376.

[58] Temesgen Hordofa T., Vu H.M., Maneengam A., Mughal N., The Cong P., Song L.Y., 2023. Does eco-innovation and green investment limit the CO 2 emissions in China? Economic Research-Ekonomska Istraživanja 36 (1), 634-649. https://doi.org/10.1080/1331677x.2022.2116067.

[59] Umar M., Nawazish M., Jamila A.H., Małgorzata P.R., 2022. The nexus of carbon emissions, oil price volatility, and human capital efficiency. Resources Policy 78, 102876.

[60] United Nations Environmental Programme, 2018. Trade in Environmentally Sound Technologies: Implications for Developing Countries. Retrieved from https://wedocs.unep.org/20.500.11822/27595.

[61] Usman A., Ozturk I., Muhammad S., Abbas M., Ullah S., Imran M., 2022. Progress in Nuclear Energy Revealing the nexus between nuclear energy and ecological footprint in STIRPAT model of advanced economies: Fresh evidence from novel CS-ARDL model. Progress in Nuclear Energy 148, 104220. https://doi.org/10.1016/j.pnucene.2022.104220.

[62] Wei S., Wen J.D., Saleem H., 2023. The impact of renewable energy transition, green growth, green trade and green innovation on environmental quality: Evidence from top 10 green future countries. Frontiers in Environmental Science 10, 1076859.

[63] Wen L., Sheng M.S., Sharp B., Meng T., Du B., Yi M., Suomalainen K., Gkritza K., 2023. Exploration of the nexus between solar potential and electric vehicle uptake: A case study of Auckland, New Zealand. Energy Policy 173, 113406.

[64] World Trade Organization, 2022. World trade report 2022:Climate chnage and international trade.

[65] Xin D., Ahmad M., Lei H., Khattak S.I., 2021. Do innovation in environmental-related technologies asymmetrically affect carbon dioxide emissions in the United States?. Technology in Society 67, 101761.

[66] Xu D., Salem S., Awosusi A.A., Abdurakhmanova G., 2022. Load capacity factor and financial globalization in Brazil: The role of renewable energy and urbanization. Frontiers in Energy Research 9, 823185. https://doi.org/10.3389/fenvs.2021.823185.

[67] Xu B., Sharif A., Shahbaz M., Dong K., 2021. Have electric vehicles effectively addressed CO₂ emissions? Analysis of eight leading countries using quantile-on-quantile regression approach. Sustainable Production and Consumption 27, 1205-1214.

[68] Yan Z., Yi L., Du K., Yang Z., 2017. Impacts of low-carbon innovation and its heterogeneous components on CO₂ emissions. Sustainability 9(4), 548.

[69] Yasmeen R., Zhaohui C., Hassan Shah W.U., Kamal M.A., Khan A., 2022. Exploring the role of biomass energy consumption, ecological footprint through FDI and technological innovation in B&R economies: A simultaneous equation approach. Energy 244, 122703. https://doi.org/10.1016/j.energy.2021.122703.

[70] Zhang N., Wang B., Liu Z., 2016. Carbon emissions dynamics, efficiency gains, and technological innovation in China's industrial sectors. Energy 99, 10-19.

[71] Zhang C., Zhou Y., Li Z., 2022. Low-carbon innovation, economic growth, and CO₂ emissions: evidence from a dynamic spatial panel approach in China. Environmental Science and Pollution Research 30, 25792-25816.

[72] Zugravu-Soilita N., 2018. The impact of trade in environmental goods on pollution: what are we learning from the transition economies’ experience? Environmental Economics and Policy Studies 20(4), 785-827.

[73] Zugravu-Soilita N., 2019. Trade in environmental goods and air pollution: A mediation analysis to estimate total, direct and indirect effects. Environmental and Resource Economics 74(3), 1125-1162.