Energy innovation and renewable energy consumption in the correction of air pollution levels

Abstract

This study analyses the relationship between economic growth and environmental pollution. Specifically, it investigates the presence of an environmental Kuznets curve (EKC) in 17 OECD countries over the period of 1990–2012. The results confirm the existence of an N-shaped EKC relationship between income and environmental degradation. The study offers a novel methodological contribution that makes it possible to explain the environmental pollution process through the analysis of low-carbon technologies. This demonstrates how income levels affect energy consumption and how higher energy demand leads to a larger share of fossil sources in the energy mix and, thus, increased greenhouse gas (GHG) emissions. The effect on per capita GHG emissions is explored in a model containing a dampening variable that moderates the relationship between energy consumption and income. This empirical evidence helps to explain the interaction between energy regulation, economic growth and carbon emissions. This study also confirms the positive effect that energy innovation process exerts on environmental pollution. Finally, it is noted that renewable energy sources help to improve air quality.