How is energy transition shaping a path to common prosperity and sustainable economic growth?

Abstract

This study assesses the impact of the transition to renewable energy and improved societal well-being on environmentally sustainable economies, concentrating on 20 major CO₂-emitting countries from 2000 to 2020. Employing the pooled mean group (PMG) method, the findings indicate that a 1% increase in fossil fuel consumption results in a significant short-term decline of approximately 0.22% and a more substantial long-term decrease of 0.43% in green growth. This decline is attributed to the exacerbation of environmental degradation through notable carbon emissions. Interestingly, a 1% increase in the Human Development Index (HDI) is associated with heightened green growth, indicating an increased awareness of environmental issues. Conversely, a 1% reduction in population has a negative impact on green growth, underscoring the importance of balancing population dynamics with sustainable development. Furthermore, diminished internet penetration, rural electrification, and poverty exert adverse effects on the green growth index. The implementation of practical policies for major CO₂ emitters is crucial, encompassing initiatives such as digitalizing the green finance market, promoting ICT diffusion, advancing regional green power generation, adopting eco-friendly practices in petroleum industries, and liberalizing green utilities trade. These measures are essential for fostering green growth, enhancing social prosperity, and mitigating environmental degradation.