Estimating environmental Kuznets Curve in the presence of eco- innovation and solar energy: An analysis of G-7 economies

The current study aims to examine the relationships between solar energy, eco-innovations and carbon emissions in the context of the Environmental Kuznets Curve in group of seven countries over the period from 1995 to 2018. According to the EKC theory, urbanization and industrialization deplete natural re-sources and produce industrial and urban wastes at early phases of economic growth. For empirical analysis, second-generation panel estimation techniques, i.e., tests for unit root cointegration techniques and Cross-Sectional Augmented Distributed Lag Model for short-run, and long-run coefficient estima-tions have been employed. The estimated findings are reconfirmed by applying Augmented Mean Group and Common Correlated Effect Mean Group methods. Results reveal that solar energy and eco-innovation exert a significant and negative long-run effect on carbon dioxide emission. Our findings showing cross sectional dependence and heterogeneity in the panel data, suggest that group of seven countries must devise strategies to invest in environmentally friendly technologies, take measures to encourage consumers and businesses to adopt environmentally friendly innovations and to subsidize the use of solar energy to cope with the environmental problems. The article provides the guidelines to the regulators while developing policies regarding environmental degradation.(c) 2022 Published by Elsevier Ltd.