The role of institutional quality in reducing environmental degradation in Canada

Abstract

This paper uses the Fully Modified Ordinary Least Squares (FMOLS) technique to explore the influence of institutional quality, income, consumption of renewable energy, trade openness, and total factor productivity on consumption-based CO2 emissions in Canada from 1996 to 2021. Estimation findings showed that institutional quality, renewable energy use, and total factor productivity exert a statistically significant and negative influence on CO2 emissions. Moreover, our findings indicated that there is a statistically significant and positive impact of income on CO2 emissions, while trade openness exhibits an insignificant impact on CO2 emissions. The study discusses alternative policies, emphasizing the role of institutional quality in reducing CO2 emissions.