Mitigation policy trust on fossil energy consumption in G7 countries: insight from avoidable policy thresholds

Abstract

Abstract This study investigated the nexuses between fossil energy consumption, economic growth, trade openness, and environmental degradation in G7 countries over the period 1965–2021. The empirical strategy for the study includes dynamic panel threshold regression (TR) analysis and quantile regression (QR) analysis. For clarity, TR is used to uncover the actionable and complementary policy thresholds in the nexuses between fossil energy consumption, trade openness, green growth, and environmental degradation. QR is utilized to explore the conditional distribution between growth outcome variables. The empirical evidence based is on TR and QR. First, using threshold regression the study revealed an actionable threshold for carbon dioxide emissions (CO2) not beyond 6.75 mts, along with a complementary threshold of 3.05bcm pd natural gas consumption, and another complementary policy threshold of 5.60% of the share of trade to GDP, respectively. 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. The novelty of this study stalk in the extant literature on providing policymakers an actionable threshold for CO2 emissions with the corresponding complementary threshold for natural gas consumption and trade policies in the nexuses between green growth and the environment.