CO2 emissions policy thresholds for renewable energy consumption on economic growth in OPEC member countries

Abstract

Purpose This study aims to examine the nexuses between economic growth, trade openness, renewable energy consumption and environmental degradation among organization of petroleum exporting countries (OPEC) members over the period 1990–2019. Design/methodology/approach The empirical strategy for the study includes dynamic heterogeneous panel pooled mean group (PMG), mean group (MG) estimators and dynamic panel threshold regression (TR) analysis. For clarity, PMG and MG are used to explore the long-run relationship between the variables, whereas TR is used to uncover the actionable and complementary policy thresholds in the nexuses between green growth and environmental degradation. Findings The empirical evidence is based on the significant estimates from PMG and TR. First, using PMG, the study finding revealed a long-run relationship between economic growth and environmental degradation via the PMG estimator. Second, using TR, the study revealed an actionable threshold for carbon dioxide emissions (CO2) metrics tons per capita (mtpc) not beyond a critical mass of 4.88mtpc, and the complementary policy threshold of 85% of the share of trade to gross domestic product, respectively. Research limitations/implications The policy relevance of the thresholds is apparent to policymakers in the cartel and for policy formulation. The policy implication of this study is straightforward. Originality/value The novelty of this study stalk in the extant literature on providing policymakers with an actionable threshold for CO2 emissions with the corresponding complementary threshold for trade policies in the nexuses between green growth and the environment.