A Dynamic Analysis of Air Pollution: Implications of Economic Growth and Renewable Energy Consumption

Abstract

This paper examines how economic growth and renewable energy consumption are associated with air pollution using a dynamic panel approach. Focusing on several major air pollutants, namely, particulate matter, sulfur dioxide, nitrogen oxide, and carbon monoxide, this paper tests the environmental Kuznets hypothesis and determines whether the use of renewable energy sources contributes to a reduction in air pollution. Data from a balanced panel of 145 countries for the period between 2000 and 2014 was used for the estimation of the dynamic panel model. The results of the dynamic panel model showed inverted U-shaped curves for the relationship between economic development and particulate matter and sulfur dioxide emissions. The results also revealed that increasing renewable energy consumption contributes to an improvement in air quality. Moreover, it was found that urbanization tends to decrease sulfur dioxide and nitrogen oxide emissions, while trade openness reduces particulate matter and carbon monoxide emissions but increases sulfur dioxide emissions.