Global Oil Price and Innovation for Sustainability: The Impact of R&D Spending, Oil Price and Oil Price Volatility on GHG Emissions

Elyas Abdulahi Mohamued, Masood Ahmed, Paula Pypłacz, Katarzyna Liczmańska-Kopcewicz and Muhammad Asif Khan
Additional contact information
Elyas Abdulahi Mohamued: Department of Geography and Environmental Studies, College of Social Science, Jigjiga University, P.O. Box 1020 Jigjiga, Ethiopia
Masood Ahmed: Department of Public Administration, Faculty of Management Sciences, University of Kotli, Azad Jammu and Kashmir, Kotli 11100, Pakistan
Paula Pypłacz: Faculty of Management, Czestochowa University of Technology, Armii Krajowej 19B, 42-201 Czestochowa, Poland
Katarzyna Liczmańska-Kopcewicz: Faculty of Economic Sciences and Management, Nicolaus Copernicus University in Torun, Gagarina 13a, 87-100 Torun, Poland
Muhammad Asif Khan: Department of Commerce, Faculty of Management Sciences, University of Kotli, Azad Jammu and Kashmir, Kotli 11100, Pakistan

Energies, 2021, vol. 14, issue 6, 1-18

Abstract: Recently, sustainable economic growth has taken the front line of the global development agenda. The common dependency on fossil fuel energy, greenhouse gas (GHG) emissions and the continuous rising demands for energy have posed challenges that put the world in a climate change trap. This work empirically analyzes the effect of innovation, oil price, oil price volatility and economic growth on GHG emissions over the period of 1991–2015. The study compares the emission level between European Union countries (EU) (26), oil-producing countries (22), China and the United States of America (USA) using the Driscoll–Kraay model. The main empirical finding points to a positive effect of innovation on GHG emission reduction initiatives in oil-importing economies. Particularly, EU countries significantly minimized emissions due to innovation, followed by China and the USA. Contrarily, the effect of innovation increases GHG emission in oil-exporting economies. The results also indicate broader significant effects of oil price and oil price volatility on GHG emission. Interestingly, the effect of oil price on GHG emission is asymmetrical between oil-exporting and -importing economies. Oil price increases in oil-importing countries decrease GHG emission; contrarily, its effect increases emissions in oil-exporting countries. Thus, oil-exporting countries lack motivation to decrease emission levels due to oil price escalation. Unlike the oil price, oil price volatility comparably decreases GHG emissions in oil-exporting and -importing economies. Thus, one might be tempted to take oil price volatility and the future uncertainty of oil price as a virtuous instance rather than oil price increment. Thus, policymakers need to pay attention to market forces and policy measures to monitor GHG emissions due to economic activities. The results are also robust under the alternative econometrics estimation model of generalized method of moments (GMM)-Differenced.

Keywords: renewal energy; innovations; economic growth; R&D spending; GHG emissions; oil price volatility; sustainability (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (24)

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