Assessing the impacts of economic growth, stringent environmental policies, renewable energy, and non-renewable energy on environmental sustainability in G-7 economies: Insights from the Method of Moments Quantile Regression

Amid growing concerns about global environmental sustainability, increasing attention has been directed toward the relationships between economic growth, stringent environmental policies, and energy consumption patterns. However, a critical gap remains in understanding how these factors collectively influence environmental sustainability in G-7 economies. This empirical study sought to bridge this gap by examining the heterogenous effects of economic growth, environmental policy stringency, energy intensity, foreign direct investment, renewable energy consumption, and non-renewable energy consumption on environmental sustainability. Load capacity factors were employed as an innovative metric to assess ecological demands relative to biocapacity. Utilizing a non-parametric Method of Moments Quantile Regression (MMQR) approach on panel data spanning 1993–2023, the findings revealed that environmental policy stringency, energy intensity, renewable energy consumption, and foreign direct investment have positive and significant impacts on environmental sustainability across heterogenous quantiles. Conversely, economic growth and non-renewable energy consumption exerted negative and significant influences on environmental sustainability across most quantiles. In conclusion, we recommend prioritizing policies that promote a transition from non-renewable to renewable energy sources through incentives such as tax reductions and subsidies. Additionally, increased investments in green technologies and enforcement of stringent environmental regulations, including carbon taxes on excessive greenhouse gas emissions, are needed to enhance environmental sustainability in the G-7 economies.