Global evidence on the energy-environment dilemma: the role of energy-related uncertainty across diverse environmental indicators

Abstract

Several existing studies show that macroeconomic uncertainties intensify global environmental and climate challenges, putting the globe at risk of not being able to achieve the United Nations' Sustainable Development Goals by 2030. In this study, we provide global evidence on the role of energy-related uncertainty in the energy - environment dilemma between 1996 and 2021. We employ three distinct environmental indicators - load capacity factor (LCF), carbon dioxide emissions (CO2), and ecological footprint (EFP) - alongside a comprehensive global energy-related uncertainty index and time-frequency-quantile methods based on the Wavelet Quantile Correlation, Cross-Quantilogram, and Wavelet Local Multiple Correlation with Dominance. The empirical results suggest negative and strong nonlinear dependencies between energy-related uncertainty and the LCF across periods and quantiles. The results further suggest that the energy-related uncertainty has positive and strong nonlinear dependences not only with CO2 emissions but also EFP across various periods and quantiles. The results further suggest that the dependences between energy-related uncertainty and environmental indicators vary across periods and quantiles, with evidence of stronger dependency structures in the long run. These findings underscore the substantial influence of energy-related uncertainties on contemporary environmental challenges. We suggest that governments and policymakers need to reshape policy directives toward mitigating the environmental effects of energy-related uncertainties.