How do environmental tax and renewable energy contribute to ecological sustainability? New evidence from top renewable energy countries

ABSTRACT

The recent COP27 has propelled nations towards achieving reduced environmental degradation. Governments are, therefore, required to develop effective policy tools to improve their environmental sustainability plans. In line with this, an empirical study is required to explore the all-inclusive effect of ecological sustainability policy on ecological footprint (EFP) among the world’s top renewable energy consumption countries from 1994 to 2018. Recent studies on environmental degradation have focused on renewable energy while neglecting the role of environmental tax. Thus, the current study fills this gap by exploring the role of environmental tax on ecological footprint. Furthermore, the study evaluates the direct and indirect impact of environmental tax and renewable energy on different levels of EFP using the method of moment quantile regression (MMQR). The DOLS, FMOLS, and panel GMM techniques are also applied to check the robustness of the MMQR results. The empirical results indicate that environmental tax and renewable energy directly and significantly reduce the EFP; however, these impacts are insignificant in countries with lower levels of environmental pollution. Furthermore, the findings indicate that environmental tax plays a leading role in changing the energy structure towards environmentally friendly energies. The results also show that economic globalization and human capital impact ecological footprint negatively. Finally, the results suggest that GDP and nonrenewable energy aggravates ecological footprint. The study results propose insights for policymakers to mitigate environmental degradation by boosting environmental tax to deter polluters and investing more in renewable energy development.

KEYWORDS:

• Environmental taxes
• renewable energy
• economic
• globalization
• human capital
• environmental sustainability

Disclosure statement

No potential conflict of interest was reported by the authors.

Author contributions

Conceptualization; Samira Shayanmehr, Riza Radmehr, Ernest Baba Ali, and Tomiwa Sunday Adebayo, Data curation; Samira Shayanmehr and Riza Radmehr, Formal analysis; Samira Shayanmehr and Riza Radmehr, Methodology; Samira Shayanmehr and Riza Radmehr Software; Samira Shayanmehr and Riza Radmehr, Writing – original draft; Samira Shayanmehr, Riza Radmehr, Ernest Baba Ali, Elvis Kwame Ofori, Tomiwa Sunday Adebayo, and Bright Akwasi Gyamfi, Writing – review & editing; Samira Shayanmehr, Riza Radmehr, Ernest Baba Ali, Elvis Kwame Ofori, and Tomiwa Sunday Adebayo.

Notes

1. Attractiveness Index of renewable energy country.

Additional information

Funding

This research did not receive any specific grant from funding agencies in the public, commercial, or not-for-profit sectors.