Decarbonizing the G7: Renewable energy, economic growth, globalization, and policy Pathways to sustainability

Abstract

In light of the COP28 directive, which encourages G7 countries to intensify their emissions efforts that may contribute to accomplishing Sustainable Development Goals (SDGs). Given that, it is vital to investigate the link between renewable energy consumption (REC), research and development expenditure (RDE), globalization (GI), energy intensity (EI), and GDP on CO₂ emissions from 1990 to 2022. To achieve this goal, the study using a rigorous econometric methodology includes the Method of Moment Quantile Regression (MMQR), robustness confirmed by FMOLS, DOLS, and DKSE models, and Dumitrescu Hurlin (2012) Panel Causality tests. The most striking finding is that REC significantly reduces CO₂ emissions across all quantiles; GI, EI, and GDP increase emissions in different quantiles, thereby balancing economic growth, which is a complex challenge for environmental sustainability. In addition, FMOLS, DOLS and DKSE advocate the robustness of the outcome, whereas causality outcome revealed that REC-RDE and EI have a bidirectional causal association. These results highlight the important role of renewable energy investments and the importance of planning for the environmental impacts of globalization. This study makes a unique contribution to the literature by providing granular insights into the drivers of carbon emissions and actionable policy recommendations to achieve SDGs 7, 12, and 13 that are important and consistent with the goals of the COP28 agreement.