The mitigating effects of economic complexity and renewable energy on carbon emissions in developed countries

TLDR

Climate change threatens the environment, prompting innovation and pollution reduction to drive cleaner economic growth. The study examines how economic complexity, renewable energy consumption, and population growth influence carbon emissions, aiming to integrate environmental degradation with economic transformation. Using panel data from 28 OECD countries (1990–2014) and econometric techniques such as augmented mean group estimation, panel cointegration, and regression, the authors analyzed these relationships. Results indicate that higher economic complexity and greater renewable energy use reduce environmental degradation in OECD countries.

Abstract

Abstract Under the growing threats of climate change, innovation and pollution reduction have become driving forces for cleaner economic growth and the environment. This study endeavors to analyze the effect of economic complexity—understood as structural transformation toward more sophisticated and knowledge‐based production, economic progress, renewable energy consumption, and population growth over carbon emissions. Our study employs panel data for a sample of 28 OECD countries covering the period of 1990–2014. The main contribution to the energy economics literature is given by bringing together the concept of environmental degradation and economic complexity controlling via renewable energy consumption and economic and population growth. Based on the extensive empirical analysis (augmented mean group estimator, panel cointegration, and panel regression techniques), we conclude that economic complexity and renewable energy might help in mitigating the environmental degradation problems in OECD countries.