Forecasting synergistic pathways between rare earth elements, renewable energy, and product and economic complexities in achieving a low-carbon future.

ABSTRACT

Recent decades have witnessed an unprecedented transformation in the global energy landscape, driven by environmental concerns and the quest for sustainable economic growth. As the world grapples with the urgent need for decarbonization, the utilization of renewable energy technologies with the instrumental role of rare earth elements (REEs) has come to the forefront. However, empirical investigations into their synergistic pathways for product and economic complexities concerning achieving a low-carbon future remain scarce. Therefore, we forecast synergistic pathways between the REE supply, renewable energy, economic and product complexities, and GDP growth using a panel dataset of 11 REE-producing countries from 1990 to 2023. We used Common Correlated Effects and Temporal Causal Models as primary methods to estimate panel long-run elasticities and subsequently forecast mutual causal synergies between the variables. The results indicated that REE supply led to renewable energy and economic growth that further elevated the countries' product and economic complexities rankings. GDP growth increased REE production, economic complexity, and renewable energy directly, and consequently, product complexity and REE production through them. This underscores the positive role of REE production coupled with renewable energy technologies in achieving a low-carbon future based on economic diversification, enhanced industrial capabilities, and technological sophistication.