The effect of innovation on CO 2 emissions of OCED countries from 1990 to 2014

Abstract

Human activities are accelerating CO₂ emissions all over the world most especially in high-income nations, spurring the rise in greenhouse gas emissions. For decades, technologies have been developed and patented in response to the environmental problems. There is an outcry for innovative ways to combat the environmental menace. This attests to the enormity of research being done, in recent years, to investigate how innovation can help mitigate CO₂ emissions. This research aims at investigating into the effect of innovation on CO₂ emissions in 28 OCED countries at an individual level for the recent period 1990 to 2014. The source of data for our utilized variables is the World Bank Indicators. Our study employed three key models based on the STIRPAT model, the economic-EKC growth model, and the innovation-EKC model. The findings of our study revealed that innovation plays a key role towards mitigation of CO₂ emissions in most OECD countries. Its impact, however, varies across the countries, depending on some key factors and channels elucidated in this paper. Additionally, our study asserts that improvement in GDP per capita leads to the rise in CO₂ in most OECD economies, although mitigate emissions in few OECDs; hence, the economic-EKC model is not valid for most economies. Non-renewable energy accelerates emissions whiles renewable energy sources mitigate emissions. Research and development (R&D) improves environmental quality and the EKC for both economic growth and innovation, valid for a few economies of the OECDs. We conclude that innovation is necessary in mitigating CO₂ emissions; hence, governments and policy makers should invest and promote innovative renewable energy sources.