Do Technological Innovation and Renewable Energy Consumption in Japan Important for Consumption-based Carbon Emissions?

Abstract

With growing global warming issues, the association between technological innovation and environmental pollution has created significant debate in recent years. This paper examines the long run and causal impact of technological innovation, economic growth, and renewable energy on consumption-based carbon emissions in Japan. The study utilized quarterly data spanning between 1990 and 2015. The study utilized recent econometrics techniques such as Maki co-integration, ARDL bunds test, FMOLS, DOLS, and frequency domain causality techniques. To the author's understanding, no prior studies have been conducted in Japan using consumption-based carbon emissions as a proxy of environmental degradation. Thus, this empirical analysis contributes to the literature. The findings from the ARDL bounds and Maki co-integration tests revealed evidence of co integration among the series. The results of FMOLS and DOLS reveal that both renewable energy and technological innovation improve the environmental quality, while economic growth harms the quality of the environment. The results of the frequency-domain causality technique reveal that technological innovation, renewable energy, and economic growth can significantly predict consumption-based carbon emissions in Japan. Based on these outcomes, we suggested that Japan's government should be careful when formulating policies that trigger growth, which will have a detrimental impact on the environmental quality. Our empirical outcome also revealed that any policy that encourages renewable energy should be encouraged since it enhances environmental quality.