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

  • Sami FethiEmail author
  • Abdulhamid Rahuma
Research Article


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.


Eco-innovation CO2 emission Refined petroleum sector CADF and the CIPS unit root tests, DSUR cointegrating test, DH panel dynamic causality 



  1. Acemoglu D, Aghion P, Bursztyn L, Hemous D (2012) The environment and directed technical change. Am Econ Rev 102(1):131–166Google Scholar
  2. Aggeri F (1999) Environmental policies and innovation: a knowledge-based perspective on cooperative approaches. Res Policy 28(7):699–717Google Scholar
  3. Ambec S, Barla P (2002) A theoretical foundation of the Porter hypothesis. Econ Lett 75:355–360Google Scholar
  4. Ambec S, Barla P (2006) Can environmental regulation be good for business? An assessment of the Porter hypothesis. Energy Stud Rev 14(2):42–62Google Scholar
  5. Ang JB (2008) Economic development, pollutant emissions and energy consumption in Malaysia. Journal of Policy Modeling 30 (2): 271–278Google Scholar
  6. Apergis N, Payne JE (2009) CO2 emissions, energy usage, and output in Central America. Energy Policy 37(8):3282–3286Google Scholar
  7. Cheng C, Ren X, Wang Z, Shi Y (2018) The impacts of non-fossil energy, economic growth, energy consumption, and oil price on carbon intensity: evidence from a panel quantile regression analysis of EU 28. Sustainability 10(11): 4067Google Scholar
  8. Cho CH, Chu YP, Yang HY (2014) An environment Kuznets curve for GHG emissions: a panel cointegration analysis. Energy Sources Part B: Econ Plan Policy 9(2): 120–129Google Scholar
  9. Churchill S A, Inekwe J, Smyth R, Zhang, X (2019) R&D intensity and carbon emissions in the G7: 1870–2014. Energy Economics 80: 30–37Google Scholar
  10. Cohen M, Tubb A (2015) The impact of environmental regulation on firm and country competitiveness: a meta-analysis of the Porter hypothesis. J Environ Manag 51:229–240Google Scholar
  11. Coondoo D, Dinda S (2002) Causality between income and emission: a country group specific econometric analysis. Ecol Econ 40(3):351–367Google Scholar
  12. Cowan WN, Chang T, Inglesi-Lotz R, Gupta R (2014) The nexus of electricity consumption, economic growth and CO2 emissions in the BRICS countries. Energy Policy 66:359–368Google Scholar
  13. De-Vita G, Katircioglu S, Altinay L, Fethi S, Mercan M (2015) Revisiting the environmental Kuznets curve hypothesis in a tourism development context. Environ Sci Pollut Res 22(21):16652–16663Google Scholar
  14. Dinda S (2004) Environmental Kuznets curve hypothesis: a survey. Ecol Econ 49(4):431–455Google Scholar
  15. Dogan E, Turkekul B (2016) CO 2 emissions, real output, energy consumption, trade, urbanization and financial development: testing the EKC hypothesis for the USA. Environ Sci Pollut Res 23(2):1203–1213Google Scholar
  16. Dogan E, Seker F, Bulbul S (2015) Investigating the impacts of energy consumption, real GDP, tourism and trade on CO2 emissions by accounting for cross-sectional dependence: a panel study of OECD countries. Curr Issue Tour 20(16):1701–1719Google Scholar
  17. Duch-Brown N, Costa-Campi MT (2015) The diffusion of patented oil and gas technology with environmental uses: a forward patent citation analysis. Energy Policy 83:267–276Google Scholar
  18. Dumitrescu EI, Hurlin C (2012) Testing for Granger non-causality in heterogeneous panels. Econ Model 29(4):1450–1460Google Scholar
  19. Farhani S, Chaibi A, Rault C (2014) CO2 emissions, output, energy consumption, and trade in Tunisia. Econ Model 38:426–434Google Scholar
  20. Farhani S, Ozturk I (2015) Causal relationship between CO2 emissions, real GDP, energy consumption, financial development, trade openness, and urbanization in Tunisia. Environ Sci Pollut Res 22(20):15663–15676Google Scholar
  21. Fernández YF, López MF, Blanco BO (2018) Innovation for sustainability: the impact of R&D spending on CO2 emissions. J Clean Prod 172(34):59–3467Google Scholar
  22. García-Granero EM, Piedra-Muñoz L, Galdeano-Gómez E (2018) Eco-innovation measurement: a review of firm performance indicators. J Clean Prod 191:1–502Google Scholar
  23. Grossman GM, Helpman E (1990) The new growth theory: trade, innovation and growth. Am Econ Rev 80(2):86–91Google Scholar
  24. Grossman GM, Helpman E (1994) Endogenous innovation in the theory of growth. J Econ Perspect 8(1):23–44Google Scholar
  25. Gujarati D (2003) Basic Econometrics. Forth Edition. Singapura: McGraw-HillGoogle Scholar
  26. Hoeffler A (2002) The augmented Solow model and the African growth debate. Oxf Bull Econ Stat 64(2):135–158Google Scholar
  27. Juanky VC (2011) The CO2 emission-income nexus: evidence from rich countries. Energy Policy 39(3):1228–1240Google Scholar
  28. Kao C (1999) Spurious regression and residual-based tests for cointegration in panel data. J Econ 90(1):1–44Google Scholar
  29. Kapusuzoğlu A (2014) Causality relationships between carbon dioxide emissions and economic growth: results from a multi-country study. Int J Econ Perspect 8(2):5–15Google Scholar
  30. Kasman A, Duman YS (2015) CO2 emissions, economic growth, energy consumption, trade and urbanization in new EU member and candidate countries: a panel data analysis. Econ Model 44:97–103Google Scholar
  31. Katircioğlu ST (2014) Testing the tourism-induced EKC hypothesis: the case of Singapore. Econ Model 41:383–391Google Scholar
  32. Komen MH, Gerking S, Folmer H (1997) Income and Environmental R&D: empirical evidence from OECD countries. Environ Dev Econ 2(4):505–515Google Scholar
  33. Kraft J, Kraft A (1978) On the relationship between energy and GNP. J Energy Dev 3:401–403Google Scholar
  34. Lean HH, Smyth R (2010) CO2 emissions, electricity consumption and output in ASEAN. Appl Energy 87(6):1858–1864Google Scholar
  35. Lee K, Min B (2015) Green R&D for eco innovation and its impact on carbon emissions and firm performance. J Clean Prod 108:534–542Google Scholar
  36. Luzzati T, Orsini M (2009) Natural environment and economic growth: looking for the energy-EKC. Energy 34(3):291–300Google Scholar
  37. Mark N, Ogaki M, Sul D (2005) Dynamic seemingly unrelated cointegrating regressions. Rev Econ Stud 72(3):797–820Google Scholar
  38. Omri A (2013) CO2 emissions, energy consumption and economic growth nexus in MENA countries: evidence from simultaneous equations models. Energy Econ 40:657–664Google Scholar
  39. Ozturk I, Acaravci A (2010) CO2 emissions, energy consumption and economic growth in Turkey. Renew Sust Energ Rev 14(9):3220–3225Google Scholar
  40. Pao HT, Tsai CM (2011) Multivariate Granger causality between CO2 emissions, energy consumption, FDI (foreign direct investment) and GDP (gross domestic product): evidence from a panel of BRIC (Brazil, Russian Federation, India, and China) countries. Energy 36(1):685–693Google Scholar
  41. Pao HT, Yu HC, Yang YH (2011) Modelling the CO2 emissions, energy use, and economic growth in Russia. Energy 36(8):5094–5100Google Scholar
  42. Pedroni P (2004) Panel cointegration: asymptotic and finite sample properties of pooled time series tests with an application to the PPP hypothesis. Econometric theory 20(3):597–625Google Scholar
  43. Pesaran MH (2004) General diagnostic tests for cross section dependence in panels. Working papers in Economics No. 0435. University of Cambridge, CambridgeGoogle Scholar
  44. Pesaran MH (2007) A simple panel unit root test in the presence of cross-section dependence. J Appl Econ 22(2):265–312Google Scholar
  45. Pesaran MH, Yamagata T (2008) Testing slope homogeneity in large panels. Journal of econometrics 142(1): 50–93Google Scholar
  46. Phillips PC, Sul D (2003) Dynamic panel estimation and homogeneity testing under cross section dependence. Econ J 6(1):217–259Google Scholar
  47. Porter M (1991) America’s green strategy. Sci Am 264:168Google Scholar
  48. Porter M, Van der Linde C (1995) Green and competitive: ending the stalemate. The Dynamics of the eco-efficient economy: environmental regulation and competitive advantage, 33Google Scholar
  49. Ramanathan R, He Q, Black A, Ghobadian A, Gallear D (2017) Environmental regulations, innovation and firm performance: a revisit of the Porter hypothesis. J Clean Prod 155:79–92Google Scholar
  50. Rennings K, Rammer C (2010) The impact of regulation-driven environmental innovation on innovation success and firm performance, ZEW Discussion Paper No. 10–65Google Scholar
  51. Schultze W, Trommer R (2012) The concept of environmental performance and its measurement in empirical studies. Journal of Management Control 22 (4): 375–412Google Scholar
  52. Seker F, Ertugrul HM, Cetin M (2015) The impact of foreign direct investment on environmental quality: a bounds testing and causality analysis for Turkey. Renewable and Sustainable Energy Reviews 52: 347–356Google Scholar
  53. Shahbaz M, Khraief N, Uddin GS, Ozturk I (2014) Environmental Kuznets curve in an open economy: a bounds testing and causality analysis for Tunisia. Renew Sust Energ Rev 34:325–336Google Scholar
  54. Shahbaz M, Nasreen S, Abbas F, Ani O (2015) Does foreign direct investment impede environmental quality in high-, middle-, and low-income countries? Energy Econ 51:275–287Google Scholar
  55. Shahbaz M, Ali Nasir M, Roubaud D (2018) Environmental degradation in France: the effects of FDI, Financial development, and energy innovations. Energy Econ 74:843–857Google Scholar
  56. Smulders S, Bretschger L (2000) Explaining environmental Kuznets curves: how pollution induces policy and new technology. CentER Discussion Paper 2000-95. Tilburg: macroeconomicsGoogle Scholar
  57. Soytas U, Sari R, Ewing BT (2007) Energy consumption, income, and carbon emissions in the United States. Ecol Econ 62(3–4):482–489Google Scholar
  58. Stern DI (2004) The rise and fall of the environmental Kuznets curve. World Dev 32(8):1419–1439Google Scholar
  59. Tang CF, Tan BW (2015) The impact of energy consumption, income and foreign direct investment on carbon dioxide emissions in Vietnam. Energy 79:447–454Google Scholar
  60. Van Leeuwen G, Mohnen P (2017) Revisiting the Porter hypothesis: an empirical analysis of green innovation for the Netherlands. Economics of Innovation and New Technology 26(1-2): 63–77Google Scholar
  61. Wagner M (2003) The Porter hypothesis revisited: a literature review of theoretical models and empirical tests. Research Memorandum Centre for Sustainability Management (SM). University of Lüneburg, LuneburgGoogle Scholar
  62. Wang Z, Yin F, Zhang Y, Zhang X (2012) An empirical research on the influencing factors of regional CO2 emissions: evidence from Beijing city, China. Appl Energy 100:277–284Google Scholar
  63. Westerlund J, Edgerton DL (2007) A panel bootstrap cointegration test. Econ Lett 97(3):185–190Google Scholar
  64. Wong SL, Chang Y, Chia W-M (2013) Energy consumption, energy R&D and real GDP in OECD countries with and without oil reserves. Energy Econ 40:51–60Google Scholar
  65. Yavuz NC (2014) CO2 emission, energy consumption, and economic growth for Turkey: evidence from a cointegration test with a structural break. Energy Sources, Part B: Econ Plan Policy 9(3):229–235Google Scholar
  66. Yin J, Zheng M, Chen J (2015) The effects of environmental regulation and technical progress on CO2 Kuznets curve: an evidence from China. Energy Policy 77:97–108Google Scholar
  67. Zhang X-P, Cheng X-M (2009) Energy consumption, carbon emissions, and economic growth in China. Ecol Econ 68(10):2706–2712Google Scholar
  68. Zhang L, Gao J (2016) Exploring the effects of international tourism on China’s economic growth, energy consumption and environmental pollution: evidence from a regional panel analysis. Renew Sust Energ Rev 53:225–234Google Scholar
  69. Zhang YJ, Peng YL, Ma CQ, Shen B (2017) Can environmental innovation facilitate carbon emissions reduction? Energy Policy 100:18–28Google Scholar

Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2019

Authors and Affiliations

  1. 1.Department of Business AdministrationEastern Mediterranean UniversityFamagustaNorth Cyprus
  2. 2.Department of Banking and FinanceEastern Mediterranean UniversityFamagustaNorth Cyprus

Personalised recommendations