Has the impact of Foreign Direct Investment on CO2 emissions and Green GDP been influenced by energy consumption and transition?

Are developed countries willing to compromise economic growth to preserve the environment? One observes some signals in that direction, but this appears more challenging for developing countries. The relocation of polluting industries via Foreign Direct Investment (FDI) can be a strategy adopted to avoid stricter environmental regulations. FDI might cut pollution by transferring green technologies that reduce energy consumption. Therefore, this study intends to understand the mediating effect of energy consumption on the impact of FDI on pollution. Moreover, this study also aims to analyse the role of FDI to attain Green Growth (economic growth minus environmental depletion) via energy transition. The main findings uncover that the relationship between FDI and pollution is mediated by energy consumption and that energy transition plays a vital role as a moderator in reducing this mediating effect. Furthermore, to meet the increased energy demand provoked by FDI, developing countries use non-renewable energy which increases pollution. Developed countries appear to be receiving greener technologies. In both developed and developing countries, FDI is a driver of Green Growth. However, developing countries require larger efforts to make energy transition an ally to reach Green Growth.