Towards sustainable production and consumption: Assessing the impact of energy productivity and eco-innovation on consumption-based carbon dioxide emissions (CCO2) in G-7 nations

Abstract

Abstract Environmental degradation has gained significant momentum over the past few decades. Globally, researchers have focused on environmental pollution due to its impact on billions of human lives. With the growing demand for fossil fuels across developing markets, there has been little global consensus on reducing the energy use and carbon emissions. Then again, many countries are making efforts to comply with the Paris Climate Agreement of 2015. Past literature suggests that international trade leads to favorable socioeconomic outcomes, yet some experts believe that international trade causes natural resource scarcity and environmental degradation. The environmental economics literature offers but no empirical studies on the nexus between energy productivity and consumption-based carbon dioxide. This paper has attempted to fill this knowledge gap by analyzing the impact of international trade (imports and exports), eco-innovation, energy productivity, and renewable energy consumption on CO2 emissions for G7 countries from 1990 to 2018. Data were analyzed using different tests: slope homogeneity and cross-section dependence test; second-generation panel unit root test; Westerlund panel co-integration test; cross-sectional autoregressive distributed lag; augmented mean group; panel causality test. The results suggested that exports, imports, eco-innovation, GDP, renewable energy consumption, and energy productivity are primary factors of consumption-based CO2 emissions in the G7 countries.