The Asymmetric Role of Financial Commitments to Renewable Energy Projects, Public R&D Expenditure, and Energy Patents in Sustainable Development Pathways

Abstract

To address the climate change impact, governments around the world have made financial commitments to dedicate a significant portion of their budgets to “research and development (R&D)” related to cutting-edge technology development. However, there is limited research in the literature that has examined the effects of financial commitment to renewable energy projects and public R&D on the environment and economic growth. Thus, this study is an endeavor to investigate the impact of financial commitments to renewable energy enterprises, public research and development expenditure, and energy technology innovation on CO2 emissions (CO2e) and economic growth for 34 countries over the period 2010–2019. This study performs a nonlinear panel analysis using the “panel non-linear autoregressive distributed lag (PNARDL)” model within the frameworks of the “Environmental Kuznets Curve (EKC) hypothesis and Solow growth model”. The findings reveal that financial commitments do not possess sufficient power to explain fluctuations in CO2e and economic growth in the short term. However, contrasting results are obtained in the long run, when the decreasing effect is more prominent than the growing effect. Moreover, an increase in public R&D expenditure significantly reduces pollution in the long term. This research also found that energy patents have no reliable power to explain the variation in economic growth. In addition, our results do not explicitly disclose the validity of the EKC argument. Accordingly, this study discussed in detail the green policy suggestions that promote the use of renewable energy and enhance the public–private partnership in the fight against climate change.