Toward Sustainability: Dynamics of Total Carbon Dioxide Emissions, Aggregate Income, Non-Renewable Energy, and Renewable Power

The purpose of energy sustainability policy is to support both economic growth and environmental quality. With climate change accelerating, economies must reduce carbon emissions. Low-carbon economics can balance the oft-contradictory policy aims of income growth and carbon reduction. Carbon pricing and renewable substitutes can pave the way. This analysis probes the dynamics of the adjustments toward the ideals of low-carbon economics through Granger causality testing of total carbon emissions, income, nonrenewable energy consumption, and renewable power. Cointegration regressions and a panel data vector error correction model are used to demonstrate the aforementioned variables' long-term balance and short-term adjustment, respectively. Two panels of countries, namely 18 European Union and 32 Organization of Economic Co-operation and Development countries, are investigated with 1990-2021 data. Determinants for the success of low-carbon development and the implications of border regulations and taxation of carbon footprint are also discussed. Economic competitiveness, as well as increases in commodity prices, would initially emerge as interferences and then induce carbon reduction and accelerate the adoption and development of green technology.