The Dynamic Interactions of CO2 Emissions and Renewable Energy Consumption on Economic Growth in G20 Countries: A Panel VAR Approach
DOI:
https://doi.org/10.66445/twe.v44i2.274783Keywords:
GDP, C02 Emissions, Renewable Energy Consumption, Panel VAR, G20 CountriesAbstract
The interactions among CO2 emissions, renewable energy consumption, and economic growth are highly interconnected, especially among the G20 countries, and significantly impact global CO2 emissions and the global economy. Therefore, we need a more comprehensive understanding to take action to harmonize economic growth with sustainable development. This research will examine the dynamic interaction between C02 emissions and renewable energy consumption on economic growth in G20 countries. In addition, this study uses Panel Vector Autoregression (VAR) methodology over the period 1990 to 2022 and includes several critical phases. This included unit root tests to assess the statistical validity of the data, cointegration tests to determine temporal changes among the variables, and impulse response function tests along with variance decomposition to determine the impact of shocks to one variable on another. The study findings show a correlation between emissions, renewable energy consumption, and economic growth in G20 countries. The results show that CO2 emissions have a favorable short-term effect, boosting GDP growth and economic activity. In contrast, C02 emissions and GDP show negative consequences in the long run. In addition, we confirm that the short-term correlation between renewable energy consumption and GDP is negative. However, the utilization of renewable energy sources has a positive impact in the long run. Therefore, G20 countries should implement renewable energy policies to promote economic growth, achieve sustainable development goals, and mitigate C02 emissions in the short and long term.
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