Environmental quality effects of income, energy prices and trade: The role of renewable energy consumption in G-7 countries.

Renewable energy plays a vital role in achieving environmental sustainability, however, the mitigating effect varies across countries depending on the share of renewables in the energy mix. Herein, we analyze the effect of renewable energy consumption, energy prices, and trade on emissions in G-7 countries. The results demonstrate that renewable energy and energy prices exert negative pressure on CO emissions while trade volume exerts a robust positive pressure on CO emissions. The country-specific estimation results provide evidence of a negative effect of energy prices on CO emissions. While the environmental Kuznets curve hypothesis is validated at the panel and country-specific levels, the effect of renewable energy consumption and trade, are disparate across countries. The panel Granger causality shows a mono-directional causality flowing from energy prices, GDP, the quadratic term of GDP and trade to CO emissions. Renewable energy consumption, however, has no causal relationship with CO emissions but indirectly affects CO emissions through its direct effect on energy prices. Joint action on trade, energy prices, and country-specific renewable energy policies have implications for environmental sustainability and the attainment of the Sustainable Development Goals (SDGs).