Managing Environmental Policy Stringency to Ensure Sustainable Development in OECD Countries

Daniela Melania Mihai, Marius Dalian Doran, Silvia Puiu, Nicoleta Mihaela Doran (), Elena Jianu and Teodor Marian Cojocaru
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Daniela Melania Mihai: Management and Business Administration Department, The National University of Science and Technology Politehnica Bucharest, Pitești University Centre, 110040 Pitesti, Romania
Marius Dalian Doran: Faculty of Economics and Business Administration, Doctoral School of Economics and Business Administration, West University of Timisoara, 300223 Timisoara, Romania
Nicoleta Mihaela Doran: Department of Finance, Banking and Economic Analysis, Faculty of Economics and Business Administration, University of Craiova, 13 A. I. Cuza, 200585 Craiova, Romania
Elena Jianu: Management and Business Administration Department, The National University of Science and Technology Politehnica Bucharest, Pitești University Centre, 110040 Pitesti, Romania
Teodor Marian Cojocaru: Department of Economics and Economic Modeling, West University of Timisoara, 300115 Timisoara, Romania

Sustainability, 2023, vol. 15, issue 21, 1-13

Abstract: In response to climate change that threatens both economic and social sustainable development, governments adopt strict environmental policy measures to reduce greenhouse gas emissions and encourage the use of energy from renewable sources. The main purpose of this study is to investigate to what extent the strictness of environmental policy can influence the level of greenhouse gas emissions and the consumption of renewable energy in selected Organisation for Economic Co-operation and Development (OECD) countries. The Fully Modified Ordinary Least Squares (FMOLS) method and Granger causality test were employed in order to investigate the long-run relationship between the main components of the environmental policy stringency index and the evolution of greenhouse gas emissions and renewable energy consumption. The results indicate significant influences of the Market-based instruments sub-index and the Technology Support policies sub-index on greenhouse gas emissions reduction, while the Non-Market Based instruments index, which includes policies that impose emission limits and standards, does not exert any significant influence in this regard. Regarding the impact on renewable energy consumption, the results of this study indicate significant positive influences from the perspective of the three sub-indices used in the analysis. These results should send a signal to decision-makers on the effectiveness of policies that impose emission limits and standards, in the sense that their improvement will generate significant influences in mitigating climate change risks.

Keywords: environmental policy stringency; greenhouse gas emissions; renewable energy consumption; market-based instruments; technology support policies (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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