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

Huri Gül Aybudak (), Waqar Khalid (), Muhammad Usman (), Mehdi Seraj (), Abdul Rafay () and Qazi Shahzad Ali ()
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Huri Gül Aybudak: Zonguldak Bulent Ecevit University
Waqar Khalid: U.S.-Pakistan Center for Advanced Studies in Energy (USPCAS-E), National University of Sciences and Technology (NUST)
Muhammad Usman: U.S.-Pakistan Center for Advanced Studies in Energy (USPCAS-E), National University of Sciences and Technology (NUST)
Mehdi Seraj: Near East University
Abdul Rafay: U.S.-Pakistan Center for Advanced Studies in Energy (USPCAS-E), National University of Sciences and Technology (NUST)
Qazi Shahzad Ali: U.S.-Pakistan Center for Advanced Studies in Energy (USPCAS-E), National University of Sciences and Technology (NUST)

Asia-Pacific Journal of Regional Science, 2025, vol. 9, issue 3, No 5, 743-772

Abstract: Abstract 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.

Keywords: Environmental sustainability; Environmental policy stringency; Renewable energy; G-7; LCF; MMQR approach (search for similar items in EconPapers)
JEL-codes: C23 Q01 Q2 Q3 Q4 Q5 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s41685-025-00388-4

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