Long‐run relationship between R&D investment and environmental sustainability: Evidence from the European Union member countries

Sudharshan Reddy Paramati, Md Samsul Alam, Shawkat Hammoudeh and Khalid Hafeez

International Journal of Finance & Economics, 2021, vol. 26, issue 4, 5775-5792

Abstract: The researchers, environmental scientists and policymakers around the world are exerting substantial efforts to mitigate the growth of CO2 emissions to save the planet. A number of measures and initiatives, such as, energy efficiency, renewable energy technologies and emission‐control are proposed in order to reduce CO2 emissions. This study examines the long‐run relationship between R&D investment and environmental sustainability in a panel of 25 European Union (EU) member countries over a period of 17 years (1998–2014). We use robust and reliable econometric methods to capture the interactions between R&D investment on renewable energy consumption and CO2 emissions. The findings confirm that the growth of R&D expenditures promotes renewable energy consumption and plays a significant role in reducing CO2 emissions in the sample countries. Furthermore, the findings suggest that increasing the share of renewable energy consumption in the total energy mix also reduces CO2 emissions. Given these results, we suggest that the EU policymakers provide more financial and regulatory assistance to the R&D activities, specifically in the energy sector, to ensure promoting low carbon economies in this region.

Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:wly:ijfiec:v:26:y:2021:i:4:p:5775-5792

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