The effect of ICT, financial development, growth, and trade openness on CO 2 emissions: an empirical analysis

Abstract

This study investigates the impact of Internet use, financial development, economic growth, and trade openness on carbon dioxide (CO₂) emissions in selected European Union (EU) countries. To this end, pooled mean group (PMG) estimator is utilized for panel data from 2001 to 2014. Empirical findings suggest that Internet use has long-run relationship with CO₂ emissions and lowering the environmental quality in EU countries. Also, the electricity consumption has a positive and significant effect on CO₂ emissions. Moreover, interestingly, economic growth and financial development have a diminishing negative impact on CO₂ emission. Heterogeneous panel Granger causality results suggest unidirectional causality running from Internet use to CO₂ emissions. The finding implies that the European Union countries did not achieve the level of green information and telecommunication (ICTs) consumption. Overall, the innovative findings indicate that Internet use is raising the threat to the sustainable development. Thus, to curb and mitigate CO₂ emissions from Internet use and electricity consumption is the need of time to maintain the sustainable development in EU countries.