Assessing the spillover effects of research and development and renewable energy on CO2 emissions: international evidence

Jamal Mamkhezri; Mohsen Khezri

doi:10.1007/s10668-023-03026-1

Assessing the spillover effects of research and development and renewable energy on CO₂ emissions: international evidence

Environ Dev Sustain. 2023 Feb 27:1-30. doi: 10.1007/s10668-023-03026-1. Online ahead of print.

Authors

Jamal Mamkhezri¹, Mohsen Khezri²

Affiliations

¹ Department of Economics, Applied Statistics, and International Business, New Mexico State University, Las Cruces, NM 88003 USA.
² Department of Economics, School of Management and Economics, University of Kurdistan Hewlêr, 30 Meter Avenue, Erbil, Kurdistan Region Iraq.

Abstract

The primary motivation of this paper is the lack of consensus on the impact of renewable energy (RE) and research and development (R&D) expenditure on CO₂emissions in the literature. Current literature has mostly ignored the spillover effect of R&D on CO₂emissions by increasing the intensity effect of technology, leading to biased results. Further, little is known about the impact of previous epidemics on CO₂emissions. This study fills these gaps by evaluating the spillover effects of RE and R&D on CO₂emissions in a global panel of 54 countries from 2003 to 2017. Using a two-way time- and spatial-fixed-effects panel analysis, we find both income-induced and scale effects of economic growth are present in our panel, though the scale effect is the dominant one. Our findings indicate that economic growth increases CO₂emissions at a decreasing rate, validating the Environmental Kuznets Curve hypothesis, and that urbanization and foreign trade worsen the environment. We also find that epidemic episodes before COVID-19 had a nonsignificant impact on CO₂emissions internationally. More importantly, our results confirm the presence of both the intensity and scale effects of R&D, with the intensity effect being the dominant one. We find overwhelming evidence that global R&D investment led to an overall (direct plus spillover) reduction of CO₂emissions, driven by its spillover effect, through two channels: RE and economic growth. Finally, we find that RE installations assist with reducing CO₂emissions internationally, though RE composition and state of R&D can lead to different findings. Our findings have significant policy implications for sustainable development. Our RE and R&D-spillover results support the policy recommendation of shifting to high-tech clean energy sources.

Keywords: CO2 emissions; COVID; Epidemics; Renewable energy use; Research and development.

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