The role of eco-innovation on CO2 emission reduction in an extended version of the environmental Kuznets curve: evidence from the top 20 refined oil exporting countries

Abstract

This study empirically investigates the role of eco-innovation on the reduction of carbon dioxide emissions (CO2) in an extended version of the environmental Kuznets curve (EKC). Under dynamic framework, second-generation panel econometric techniques such as the CADF and the CIPS unit root tests, DSUR cointegrating test, and DH panel causality test are employed over the period 2007-2016 for the case of top 20 refined oil exporting countries. Results reveal that eco-innovation (i.e. research and development) exerts a negative and significant long-term effect on carbon emissions (CO2). This result indicates that the extended version of EKC and the Porter hypotheses are validated for the selected countries. The findings, which show heterogeneity and cross-sectionally dependence in the panel time-series framework, suggest that rising levels of carbon emissions and real income may encourage more research and development (i.e. eco innovation) and lower energy consumption.