Identifying impact of international trade and renewable energy consumption on environmental quality improvement and their role in global warming.

ABSTRACT

There is a lack of proper research that highlights the impact of institutional quality (IQ) and renewable energy consumption (REC) on the carbon emission (CE). The significance of IQ and REC in the achievement of zero CE is highlighted in this research. The current research reports the effects of these important factors on the consumption-based carbon emissions in the G-7 countries from 1995 to 2018. Based on the outcome of the cointegration test, the long-run connection is recognized between IQ, REC, GDP, exports, imports, and consumption-based CE. The findings also validated that there exist significant decrease and increase in the CE in both the short and long run; for instance, IQ, REC, and exports decrease the CE, while imports and GDP increase the CE. The estimates of causality test showed that policies aimed at improving IQ, REC, GDP, exports, and imports have a significant impact on the CE. Consequently, based on these results, policymakers in the G-7 must prioritize IQ and REC to enhance environmental quality and attain carbon neutrality.