The Impact of Renewable Energy Consumption, Economic Growth, Globalization, and Financial Development on Carbon Dioxide Emissions: Evidence from Selected G7 Economies

ABSTRACT: The aggregate upsurge in carbon dioxide emissions (CO₂) witnessed through environmental degradation and global climate change is a call for great concern. This, therefore, calls for the enactment, utilization and implementation of provisions and policies geared towards curbing this global economic bad without impeding global economic growth rates. This study ascertains the extent to which renewable energy consumption (REC), economic growth (GDP), population growth (POP), globalization (GLO), and financial development (FD) affect carbon dioxide emissions (CO₂) in selected G7 economies (France, Germany, Canada, Italy, and the United Kingdom) from 1990–2020. The Dynamic Fixed Effect Autoregressive Distributive Lag (DFE-ARDL) and the Pooled Mean Group ARDL (PMG-ARDL) methods were employed for analysis. The empirical findings for DFE-ARDL showed that REC, GDP, and POP have an adverse association with CO₂ in the long-term. However, in the short-term, REC and FD improve the environment, while GDP and POP drive CO₂. It is observed that the result for REC in the short and long-run is consistent. The PMG-ARDL results revealed that REC and GLO negatively affect CO₂ in the long-run, and in the short-run, GDP spurs CO₂, while FD reduces it. The result summary of both methods employed demonstrates that REC, GLO, and FD benefit the environment. At the same time, GDP and POP harm the environment in the short-run but reduce CO₂ in the long-run. Conclusively, the research recommends increasing the utilization of renewable energy and policies that enable economic growth and CO₂ to move in the opposite direction.