Do remittance and renewable energy affect CO2 emissions? An empirical evidence from selected G-20 countries

Abstract

The study aims to compare CO2 emissions, renewable energy, trade openness, gross domestic product (GDP), financial development (FD), and remittance in selected G-20 countries. The study carried out fully modified ordinary least square (FMOLS) and dynamic ordinary least square (DOLS) models for estimation covering annual data from the year 1990–2019. LM tests detected the cross-section dependency while stationarity of the variables was checked through Levin-Lin-Chu and Im-Pesaran-Shin tests along with Hansen's Covariate-Augmented Dickey Fuller (CADF) test in the presence of cross-section dependency. The panel unit root tests reported that all variables became stationary after converting them into the first difference. The Panel Cointegration and Wester-Lund test examined the existence of long-run equilibrium nexus among selected variables in the context of G-20 countries. The study's findings show that there is a significant and negative relationship between renewable energy and CO2 emissions. It was proven in two models that the economic growth of selected G-20 countries has a positive relationship with CO2 emissions. Furthermore, findings indicate that the coefficient of financial development is positive and significantly impacts CO2 emissions. The remittances have a significant positive effect on CO2 emissions, while trade openness has an insignificant impact on CO2 emissions in both models. This research will enlighten policymakers, researchers, governments, and environmentalists toward attaining a sustainable environment by wisely consuming remittances and renewable energy resources.