Nexus between Green Investment, Fiscal Policy, Environmental Tax, Energy Price, Natural Resources, and Clean Energy—A Step towards Sustainable Development by Fostering Clean Energy Inclusion

Abstract

This study aims to examine the relationship between green investment (GI), fiscal policy (FP), environmental tax (ET), energy price (EP), natural resource rent (NRR), and the consumption of clean energy (CE) to promote sustainable development in Cambodia for the period 1990–2021. The study implemented linear and nonlinear frameworks to document explanatory variables’ potential effects on clean energy consumption in the long and short run. The research findings demonstrate a robust and favorable connection between GI, FP, ET and CE, both in the long term and short term. An augmentation in GI results in the establishment of sustainable growth in the utilization of renewable energy, thereby underscoring the significance of green initiatives in advancing clean energy technologies. Fiscal policies, encompassing tax incentives and subsidies, exert a substantial and enduring influence on expanding renewable energy sources. Implementing environmental taxes catalyzes the demand for clean energy, significantly preserving the environment and promoting sustainable energy practices. Furthermore, the study illuminates the inverse correlation between oil prices and REC. Adopting renewable energy sources may face obstacles in the form of elevated oil prices, as conventional energy sources maintain a cost advantage. On the contrary, decreased oil prices and natural resource rent incentivize transitioning towards using clean energy. Countries that heavily depend on the export of natural resources may display a reduced inclination to invest in renewable energy, commonly called the “resource curse” phenomenon. This study provides valuable insights into the intricate interplay of multiple factors that influence renewable energy consumption and contribute to sustainable development. Policymakers, businesses, and researchers can employ these findings to develop productive strategies that advance the inclusion of clean energy, tackle potential challenges, and cultivate a more environmentally friendly and sustainable future.