Impact of economic policy uncertainty and renewable energy on environmental quality: testing the LCC hypothesis for fast growing economies

Yanan Wu; Ahsan Anwar; Nguyen Ngoc Quynh; Ali Abbas; Phan The Cong

doi:10.1007/s11356-023-30109-3

Impact of economic policy uncertainty and renewable energy on environmental quality: testing the LCC hypothesis for fast growing economies

Environ Sci Pollut Res Int. 2023 Oct 26. doi: 10.1007/s11356-023-30109-3. Online ahead of print.

Authors

Yanan Wu¹, Ahsan Anwar², Nguyen Ngoc Quynh³, Ali Abbas⁴, Phan The Cong⁵

Affiliations

¹ School of Digital Economics, University of Sanya, Sanya, China.
² Faculty of Management Sciences, Department of Business Administration, ILMA University, Karachi, Pakistan.
³ Faculty of Economics, Thuongmai University, Hanoi, Vietnam. quynh.nn@tmu.edu.vn.
⁴ National College of Business Administration and Economics, Lahore, Pakistan.
⁵ Faculty of Economics, Thuongmai University, Hanoi, Vietnam.

PMID: 37884705
DOI: 10.1007/s11356-023-30109-3

Abstract

This study investigates the influence of economic policy uncertainty and trade openness on load capacity factor for fast growing countries for time period of 1996-2019. The empirical outcomes verify the presence of the LCC hypothesis in fast growing economies. Results also show that economic policy uncertainty reduces environmental quality for lower quantiles, whereas renewable energy consumption is a useful tool for improving environmental quality. Moreover, the negative sign of the coefficient of trade openness demonstrates that the current pattern of trade is not providing the desired outcomes. Based on these empirical findings, we suggest a comprehensive policy framework to attain the targets of SDG 07 (renewable energy), SDG 08 (economic growth), and SDG 13 (climate action).

Keywords: Economic policy uncertainty; LCC hypothesis; Load capacity factor; Sustainable development goals.