An Empirical Analysis of the Impact of Environmental Taxes, Renewable Energy Consumption, and Economic Growth on Environmental Quality: Evidence from Twelve Selected Countries

Abstract

Environmental pollution (EP) and global warming (GW), which emerged with industrialization, have become an increasing global problem in recent years. Greenhouse gases (GHGs) resulting from EP forced countries to introduce carbon tax (CT). This study aims to examine the effect of environmental taxes (ETs), renewable energy consumption (REC), and economic growth (EG) on environmental quality (EQ) in 12 countries with the highest carbon emissions (CEs) over the period 1998-2019. The long-term AMG estimation results showed that ETs and REC reduced EP while EG deteriorates EQ in the countries included in the analysis. Nonetheless, Dumitrescu and Hurlin's (D-H) causality test results indicated that a bilateral causality existed between REC and EG and CEs, whereas a unilateral causality existed from ETs to CEs. Therefore, it is important to implement more effective policies to increase ETs and REC in terms of a sustainable environment in the relevant countries.