Aggregate and Disaggregate Analysis of Renewable Energy on Consumption-based carbon emissions: A Global Perspective with Net-importers and Net- exporters of carbon emissions

Abstract

Renewable energy is clean and safest modern energy source, which serves as a pillar to meet future energy demand with environmental sustainability. Earlier researchers have investigated the role of renewable energy on emissions massively. The Effectiveness of individual renewable energy source on environment is often omitted. Therefore, this study examines the individual and relative strength of renewable energy sources by disaggregation of renewable energy according to sources of electricity production (hydroelectricity, solar, wind, biomass and geothermal). Unlike previous studies that mainly focused on terrestrial carbon emissions, present study focused on consumption-based carbon emissions. It is trade adjusted, distribute emissions responsibilities not only producers but consumer shoulders and fighting against carbon leakage. The study has extended the EKC hypothesis by incorporating renewable energy. Based on this hypothesis, current study scrutinizing impact of aggregate and disaggregated renewable energy on global panel data of 107 countries including sub-samples of net-importers of carbon emissions and net-exporters of carbon emissions over the period 1991-2021. The study has employed traditional empirical techniques pooled OLS, fixed effects and random effects along Driscoll and Kray regression method to address heterogeneity, autocorrelation and cross-sectional dependency. Moreover, the advance technique of two step system GMM is applied to address endogeneity in the models. The outcomes of traditional and advance technique of GMM indicated existence of EKC for global panel. Moreover, analysis also confirmed that EKC hypothesis is valid for net-importers of carbon emissions and net-exporters of carbon emissions. Outcomes regarding renewable energy showed its protentional role to reduce the consumption based carbon emissions. For disaggregate analysis, outcomes indicated that electricity generation from solar, wind, biomass and geothermal energy improves environmental quality while hydroelectricity degrade the environment. Thus, current study provides the evidence of significant impact of aggregated and disaggregated renewable energy on consumption-based carbon emissions.