Environmental pollution and energy research and development: an Environmental Kuznets Curve model through quantile simulation approach

Energy research and development (R&D) and environmental sustainability is often referred to as two interrelated trends, especially in the current context of the 4(th) industrial revolution. As a primary input of energy innovations, R&D in the energy sector constitutes a vital tool in addressing global environmental and energy challenges. In this frame, we observe the effects of disaggregated energy R&D on environmental pollution within the Environmental Kuznets Curve (EKC) framework in thirteen developed countries over the period 2003-2018. By employing the panel quantile regression technique, we find an inverted U-shaped nexus between economic growth and carbon emissions only in higher carbon-emitting countries, thus, confirming the EKC hypothesis. However, the U-shaped nexus is more predominant in lower carbon-emitting countries. As such, we demonstrate that there is not any single dynamic in the relationship between economic growth and pollution as reported in previous studies. Contrary to expectations, we find that energy efficiency research and development is more effective in curbing carbon emissions compared to fossil fuels and renewable energy research and development. The empirical results indicate also that only energy efficiency R&D mitigates significantly the CO2 emissions from the 50(th) quantile up to 90(th) quantile, although the magnitude of the negative sign is more pronounced (in absolute term) at the highest quantile (90th). In this light, our findings would guide policymakers in the establishment of sustainable energy research and development schemes that will allow the preservation of equilibrium for the environment while also promoting energy innovations.

Automated summary

Energy research and development and environmental sustainability are closely related, with energy efficiency research found to be more effective in reducing carbon emissions, especially in high carbon-emitting countries. Within the Environmental Kuznets Curve framework, there is an inverted U-shaped relationship between economic growth and carbon emissions, more prominently observed in lower carbon-emitting countries.