Energy efficiency and environmental technologies in carbon emissions reduction strategies for a sustainable future: estimation through simultaneous equation systems

Abstract

Energy is at the center of economic growth and environmental sustainability. Increasing energy efficiency and turning to environmentally friendly technologies are indispensable elements not only in reducing carbon emissions but also in supporting the transition to a green future. This study aims to deeply examine the simultaneous dynamic interactions between energy, environmental technologies, and economic growth by focusing on the environment and analyzing the transformative effects of these factors on environmental sustainability from a broad perspective. The models were estimated via simultaneous equation systems with two-stage and three-stage least squares methods with monthly data for Organization for Economic Cooperation and Development (OECD) countries between 1990 and 2021. As a result of the analyses, the estimation results of the two methods generally support each other. Notably, economic growth causes carbon emissions, and when tax revenues on energy are added to the model, the negative effect of economic growth on carbon emissions turns positive. Another significant result shows that energy efficiency does not reduce carbon emissions. Even an increase in energy efficiency causes an increase in carbon emissions, and the rebound effect is valid. Population and energy density do not have a negative impact on carbon emissions.