Geoscience Frontiers xxx (xxxx) xxx

Contents lists available at ScienceDirect

Geoscience Frontiers
journal homepage: www.elsevier.com/locate/gsf

Are environment-related technologies key to unlock the path towards

sustainable development: An econometric analysis
Amar Rao a, Satish Kumar b,⇑
a
School of Management, BML Munjal University, Gurugram, Haryana, India
b
Indian Institute of Management Nagpur, India

a r t i c l e i n f o a b s t r a c t

Article history: The objective of this study is to investigate the correlation between energy intensity and environment-
Received 8 December 2022 related technology in industrialized countries. By utilizing panel data from 23 countries over a span of
Revised 2 July 2023 32 years (1990–2021), this research aims to contribute to the comprehension of the role of green inno-
Accepted 28 August 2023
vation in sustainable development. The study employs the Stochastic Impacts by Regression on
Available online xxxx
Population, Affluence, and Technology model while controlling for variables including population growth,
gross domestic product in purchasing power parity, Information and Communication Technology capital
Keywords:
deepening, renewable energy consumption, and green innovation represented by research and develop-
Technology
Sustainable development
ment expenditure on environment-related technology. The results of the analysis, employing panel unit
Energy intensity root tests, cross-sectional dependence tests, and a Method of Moments quantile regression, reveal that
Quantile regression green innovation has a positive influence on diminishing energy intensity, with a more substantial
impact at higher quantiles. Moreover, ICT capital deepening is determined to have a positive and note-
worthy effect on reducing energy intensity. The findings of this study offer valuable insights for policy-
makers in their endeavours to accomplish sustainable development goals.
Ó 2023 China University of Geosciences (Beijing) and Peking University. Published by Elsevier B.V. on
behalf of China University of Geosciences (Beijing). This is an open access article under the CC BY-NC-ND
license (http://creativecommons.org/licenses/by-nc-nd/4.0/).

1. Introduction deforestation, and agricultural practices (Schmalensee et al.,

The issue of adverse climate events and their subsequent effects
on the world stands as one of the most daunting challenges we face
in contemporary times. To achieve a future characterized by sus-
tainability and long-term viability, it is vital to comprehend the
effects of climate change on our lives (Fuso Nerini et al., 2019).
Merely reducing carbon emissions or transitioning to renewable
energy sources is insufficient; we must also seek solutions that
enable us to coexist with nature in a way that avoids irreparable
harm while keeping pace with the rapid rate of technological
development and innovation. The escalating emissions of green-
house gases (GHGs) pose the most significant peril to the sustain-
able development of our planet, leading to a decline in
environmental quality (Aye and Edoja, 2017; Khan et al., 2020;
Omri et al., 2015; Thomakos and Alexopoulos, 2016). Although this
phenomenon has occurred throughout human history, the 20th
century witnessed its most rapid and profound transformation.
Climate change primarily arises from anthropogenic activities,
including the combustion of non-renewable energy sources,
⇑ Corresponding author.
E-mail address: satish@iimnagpur.ac.in (S. Kumar).
1998). These activities increase the concentration of GHGs in the
atmosphere, resulting in a rise in global temperatures, which, in
turn, increases the frequency of extreme weather events such as
floods, droughts, and hurricanes. Climate change is causing severe
disruption to the world’s environment and ecosystems. Consider-
ing the potential impact of climate change on nearly all areas of
sustainable development, there is an urgent need to comprehend
how actions taken to combat climate change can either support
or undermine all other Sustainable Development Goals (SDGs).
The objective of sustainable development is to satisfy the cur-
rent generation’s requirements and desires while safeguarding
the capacity of future generations to fulfill their own (Robert
et al., 2005). This necessitates a more efficient utilization of
resources, a reduction in our dependence on nonrenewable
sources, and the development of innovative solutions to address
challenges such as global warming and environmental degrada-
tion. To achieve sustainable development, it is essential to consider
the interconnectedness of various components within our society
and environment. Given the complexity and interdependence of
these issues, there are no straightforward solutions. Instead, adopt-
ing a ‘‘whole-of-systems” approach becomes crucial, wherein all

https://doi.org/10.1016/j.gsf.2023.101702
1674-9871/Ó 2023 China University of Geosciences (Beijing) and Peking University. Published by Elsevier B.V. on behalf of China University of Geosciences (Beijing).
This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/).

Please cite this article as: A. Rao and S. Kumar, Are environment-related technologies key to unlock the path towards sustainable development: An econo-
metric analysis, Geoscience Frontiers, https://doi.org/10.1016/j.gsf.2023.101702
A. Rao and S. Kumar
stakeholders — individuals, businesses, government, and civil soci-
ety — collaborate to drive transformative change.
As the human population continues to grow, there is a corre-
sponding increase in our demand for energy and other resources
(Khan et al., 2021). Unfortunately, this has led to a rapid depletion
of our planet’s natural resources, and the consequences are now
being felt globally. Our unsustainable lifestyle has resulted in
numerous problems that require immediate solutions. It is crucial
for us to become aware of how we can live in a more sustainable
manner in an energy-conscious world. Energy consumption repre-
sents one of the major obstacles to achieving sustainable develop-
ment. In order to meet our ever-growing energy needs, it is
necessary to find ways to improve energy efficiency and reduce
our reliance on fossil fuels. Therefore, it becomes imperative to
enhance the utilization of sustainable energy alternatives (Qazi
et al., 2019). By adopting measures to increase energy efficiency
and transition to sustainable energy sources, we can address the
challenges posed by our current energy consumption patterns
and work towards a more sustainable future.
Fig. 1 illustrates the global primary energy consumption by
source. The trends in primary energy consumption from 1995 to
2020 reveal that oil and coal have remained the dominant sources
of energy, albeit with declining shares. During this period, a notice-
able shift in the composition of primary energy consumption can
be observed. In 1995, oil and coal accounted for a significant share
of approximately 57%, which gradually decreased to 49% by 2020.
On the other hand, the proportion of nuclear energy remained
Fig. 1. Global primary energy consumption by source(Reprinted from Our World in Data based on Vaclav Smil (2017) and BP Statistical Review of World Energy
OurWorldInData.org/energy (https://ourworldindata.org/grapher/global-energy-consumption-source under Creative Commons BY license).
2
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relatively stable, hovering around 4% throughout the same time-
frame. In contrast, there was a remarkable increase in the share
of solar power and renewables, with solar power exhibiting the
highest growth rate among all energy sources. In 1995, solar power
and renewables collectively contributed a mere 0.5% to primary
energy consumption, but by 2020, their share had surged to 5%.
These trends signify a transition towards a more diversified and
sustainable energy mix, highlighting an increased focus on renew-
able energy sources for the future.
A multitude of SDGs have been established to address the
urgent need for decreasing energy consumption and promoting
sustainable practices (Filipović et al., 2022). These goals encompass
various objectives, including the ambitious target of achieving net-
zero emissions by 2050, a 40% reduction in carbon emissions from
energy production by 2030, and ensuring affordable and accessible
energy worldwide by 2030. Energy efficiency and conservation are
integral components of the SDGs, aiming to reduce global energy-
related CO2 emissions by 50% relative to 2010 levels by 2030.
The current goals also prioritize enhancing energy efficiency
and decreasing energy usage in important areas like residential
buildings, transportation, and industrial processes. The decrease
in energy intensity (EI) plays a vital role in mitigating the negative
effects of climate change. EI measures the energy efficiency of an
economy or sector by quantifying the amount of energy required
to produce a unit of economic output, such as a unit of gross
domestic product (GDP). Lower EI indicates greater energy effi-
ciency, as it signifies that less energy is needed to generate the
A. Rao and S. Kumar
same amount of output. Reducing EI is a fundamental concept in
the sustainability framework, as it contributes to the reduction of
greenhouse gas emissions and enhances energy security. Between
1990 and 2015, global energy efficiency, measured by energy con-
sumption per unit of GDP, declined by approximately 33%. Recog-
nizing the importance of addressing this issue, authorities from
major economies, in collaboration with the International Energy
Agency (IEA), have made commitments to increase public sector
investments in low-carbon research and development, as well as
expedite the adoption of low-carbon technologies (Paramati
et al., 2022). However, the outbreak of the COVID-19 pandemic
resulted in a notable reduction in energy consumption across all
economic sectors. The transportation and service sectors experi-
enced the most substantial declines, while the industrial sector
observed comparatively smaller reductions. As a consequence,
the pandemic led to an increase in EI across all sectors of the econ-
omy, with the industrial sector in the European Union witnessing
the most significant rise (Rokicki et al., 2022).
The research objective of this study is to examine the relation-
ship between EI and green innovation (GI) in industrialized coun-
tries. Specifically, the study aims to investigate the impact of GI
on reducing EI and contributing to sustainable development. This
will be achieved by using panel data from 23 countries over a
32-year period from 1990 to 2021 and controlling for factors such
as population growth (POP), gross domestic product in purchasing
power parity (GDPPPP), ICT capital deepening (ICT), renewable
energy consumption (REN), and GI proxied by research and devel-
opment budget on environment-related technology. The study will
utilize the STIRPAT model to analyze the data and will employ
panel unit root tests, cross-sectional dependence tests, and a
Method of Moments quantile regression to obtain results. The
expected outcome of this research is to provide insights for policy-
makers in their efforts to achieve sustainable development goals.
The established targets aimed at reducing EI play a crucial role
in mitigating CO2 emissions and promoting environmental sustain-
ability (Zhang and Wang, 2022; Zhou et al., 2021). EI, commonly
used as a metric to measure energy consumption or operational
efficiency, serves as an indicator of energy use per unit of output
(Bilgili et al., 2017a; Chen et al., 2016; Tan and Lin, 2018). A higher
EI indicates greater energy consumption for a given level of output.
Reducing EI has garnered significant attention as a critical measure
for fostering green and circular economies (Luan et al., 2020).
The Organization for Economic Co-operation and Development
(OECD), composed of 38 nations, focuses on promoting economic
growth and international trade. These OECD countries represent
some of the most developed and economically advanced nations
globally, including the United States, Canada, Japan, Germany,
France, the United Kingdom, Australia, and South Korea. Reports
on energy consumption indicate that OECD countries exhibit
higher energy consumption compared to other regions, with fossil
fuels, coal, gas, and other natural resources comprising the primary
sources of energy (Bashir et al., 2020). Notably, Sarkodie et al.
(2021) documented a fourfold decrease in energy intensity in
heavily industrialized OECD nations. The energy composition in
OECD countries encompasses a diverse array of sources, including
fossil fuels like oil, gas, and coal, as well as nuclear power and
renewable energy sources such as hydro, wind, solar, geothermal,
and biomass (IEA, 2019). The relative contribution of each source
varies across nations, influenced by factors such as resource avail-
ability, energy security considerations, and environmental
objectives.
According to the IEA (2019), fossil fuels accounted for approxi-
mately 62% of the primary energy supply in the OECD countries in
2019. However, governments have been actively working towards
decreasing greenhouse gas emissions and transitioning towards
cleaner energy alternatives, resulting in a decline in the proportion
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Geoscience Frontiers xxx (xxxx) xxx
of fossil fuels in the energy mix over time. Nuclear power plays a
significant role in the energy mix of certain OECD countries, partic-
ularly in Europe. In 2019, nuclear energy accounted for approxi-
mately 18% of electricity production in the OECD, with France
being the largest consumer, generating nearly 70% of its total elec-
tricity from nuclear power. The use of clean energy sources has
also witnessed substantial growth in OECD countries, particularly
in recent years. The share of renewable energy in the primary
energy supply of the OECD increased from 8% in 2000 to 12% in
2019. Different countries have adopted various renewable energy
sources based on their specific circumstances. For instance, coun-
tries like Norway and Canada heavily rely on hydropower, while
others like Germany and the United States have experienced signif-
icant advancements in wind and solar power.
EI and research and development (R&D) budgets vary across dif-
ferent industrialized countries. In 2019, Canada, Denmark, Finland,
Germany, Japan, Sweden, and Switzerland had lower energy inten-
sities compared to the OECD average, while Australia, Greece, Lux-
embourg, and the United States had higher energy intensities.
Between 2010 and 2019, energy intensity decreased in all coun-
tries except Luxembourg, which saw a 4% increase. In terms of
R&D budgets, Germany, Japan, and the United States spent the
most in 2019, while Greece, Luxembourg, and Portugal spent the
least. However, the growth in R&D budgets between 2010 and
2019 was highest in Korea, followed by Israel, while Australia,
Canada, and Greece had the lowest growth rates. Overall, these
trends suggest a diverse range of approaches to addressing energy
intensity and the role of R&D in sustainable development among
these industrialized countries.
In the context of this, the present study seeks to understand our
environmental technologies helpful in reducing energy intensity
and meeting SDG 7[Enhancing energy efficiency plays a pivotal
role in achieving the global climate objectives. The 2030 target sets
forth the aim of attaining an annual advancement in energy inten-
sity by 2.6 percent, which represents a twofold increase compared
to the rate witnessed between 1990 and 2010. (Source: UN Statis-
tics Division - Sustainable Development Goals)], specifically SDG
7.3-Energy Efficiency. The higher the EI, the more energy is
required to produce the same output, which can lead to increased
environmental impact and costs. Energy efficiency refers to the uti-
lization of technology and methods that necessitate less energy to
generate equivalent results. By improving energy efficiency, energy
intensity can be reduced, leading to lower environmental impact
and costs. This relationship is important for achieving sustainable
development and mitigating climate change, as it can help decou-
ple economic growth from energy consumption and emissions.
The term GI represented by environment-related technologies,
pertains to the progression and utilization of technologies and
inventive solutions that foster sustainability and environmental
preservation (Horbach et al., 2012; Markard et al., 2012). These
technologies encompass a wide array of domains, including renew-
able energy sources, energy-efficient construction materials and
appliances, waste management and recycling systems, low-
emission vehicles, and other eco-friendly products and services
(Diaz Lopez et al., 2019; Rennings et al., 2009). In the context of
the study, GI, proxied by environment-related technologies, serves
as a measure to evaluate the level of investment and dedication
dedicated to the advancement and implementation of technologies
that support sustainable development and mitigate the adverse
effects of climate change (Ghisetti et al., 2015;). It indicates the
extent to which organizations and societies are embracing and
incorporating environmentally friendly practices and solutions
into their operations and daily lives (Hu et al., 2020 ).
The present investigation distinguishes itself from prior
research by specifically examining the association between EI
and GI within industrialized nations. Moreover, it adopts the
A. Rao and S. Kumar
STIRPAT model to analyze panel data encompassing a span of
32 years across 23 countries. The study seeks to contribute to the
understanding of the role of GI in sustainable development and
also controls for factors such as POP, GDPPPP, ICT and REN. Also,
the current study makes key contributions to the growing litera-
ture in energy economics. First, this study highlights the signifi-
cance of GI (for the demand for energy by selected OECD
countries as the demand for energy well suited for the economies
of host countries but at the cost of the surrounding environment.
The evolving role of green innovation in the energy consumption
of developed economies has the potential to offer fresh perspec-
tives and contribute to the theoretical literature in this domain.
Additionally, this research examines the impact of investments
in information and communication technology (ICT) equipment,
known as ICT capital deepening, on energy intensity. On the one
hand, ICT utilization in operational processes and integration with
other business activities may influence energy consumption. On
the other hand, ICT has the potential to reduce energy costs by
optimizing industrial processes and replacing physical operations.
As a result, the overall effect of ICT on energy usage remains uncer-
tain. This study concludes with original findings and innovative
recommendations that can contribute to the achievement of SDGs
such as universal access to clean energy (SDG-7), sustainable eco-
nomic growth (SDG-8), responsible consumption patterns (SDG-
12), and environmental quality enhancement (SDG-13).
The rest of this paper is structured as follows: Section 2 dis-
cusses the existing literature. Section 3 reports on material and
methods. The empirical results and relevant discussion are dis-
cussed in Section 4. The conclusion and policy implications are pre-
sented in Section 5.
2. Review of literature
In academia, theories like Environmental Kuznets Curve (EKC),
Porter Hypothesis, Eco-Efficient Theory (EET) and Technological
Change Theory (TCT) have been proposed to address the link
between economic growth, environmental degradation, and the
role of technology. Our research article is focused on TCT, which
posits that technological advancements can reduce EI, leading to
lower GHGs and negative environmental impacts. Environment-
related technology can provide cleaner and more efficient ways
of producing goods and services. The introduction of new and
improved environment-related technologies can reduce EI, such
as wind and solar power, and energy-efficient building materials.
The correlation between environment-related technologies and
energy sources is crucial to address the negative environmental
impacts of economic activities. The use of environment-related
technologies can lead to cleaner and more efficient production of
goods and services, while renewable energy sources such as wind
and solar power can significantly reduce the EI of electricity pro-
duction, which is a major contributor to GHGs. Additionally,
energy-efficient building materials and technologies can also
reduce the EI of the built environment, which is a significant con-
tributor to energy consumption and GHGs. Therefore, to achieve
sustainable economic growth and tackle environmental challenges,
it is crucial to investigate the link between environment-related
technology and energy sources. Furthermore, policies and regula-
tions may be required to encourage the development and adoption
of new technologies while limiting the use of energy-intensive and
ecologically damaging technologies.
Energy resources have long been recognized as strategically
important for any economy, leading to a significant focus on their
availability and efficient utilization (Tvaronavičienė et al., 2018).
EI, a widely used metric, represents the share of total energy input
to GDP within an economy (Saunders et al., 2020). It serves as a
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Geoscience Frontiers xxx (xxxx) xxx
measure to compare the energy reliance and efficiency of regional
economic development. Higher EI indicates a greater cost associ-
ated with converting energy into GDP, while lower EI signifies a
lower cost (Mahmood, 2021). However, due to the dynamic nature
of EI across nations, describing a specific effect’s fundamental prin-
ciple and economic significance can be challenging. Consequently,
various approaches have been employed in the literature to assess
EI. These approaches can be broadly categorized into two types.
The initial classification comprises techniques for decomposition,
such as the method of structural decomposition and the method
of exponential decomposition. These approaches analytically
examine alterations in EI by breaking them down into contributing
factors, including changes in EI at the sectoral level and variations
in sectoral output. Conversely, the subsequent classification
encompasses regression models that employ EI as the outcome
variable. These models explore the functions of influential factors
of significance (Zhou et al., 2021).
With technological progress as a driving force, a decline in EI
can be achieved (Lin and Du, 2014). The improvement of marginal
productivity of energy through the implementation of advanced
technology will lead to an indirect enhancement of energy alloca-
tion efficiency and ultimately result in improved energy utilization
efficiency. This, in turn, contributes to the reduction of EI (Yang
et al., 2019; Okushima and Tamura, 2010; Saunders et al., 2020)
as improvements in efficient use of energy is one of the key drivers
in achieving reduced EI (Yuan et al., 2012). The second driver is
economic growth which can help to achieve the target of reduced
EI.
According to Mahmood and Ahmad (2018), they examined the
influence of economic growth on EI for a set of European countries
by using detrended energy intensity and showed that with an
increase in economic growth, there is a reduction in EI.
Mahmood (2021) found similar results for the panel of South Asian
economies. Research conducted by Hundie and Daksa (2019)
demonstrated a curvilinear relationship, resembling an inverted
U or Environmental Kuznets curve, between economic growth
and EI. The findings indicate that during the early stage of develop-
ment, characterized by industrialization, economic growth leads to
an increase in EI. However, at later stages of development, a decou-
pling effect occurs, indicating a reduction in EI despite continued
economic growth. Duro et al. (2010) showed the relevance of final
EI and GDP per capita in explaining the inequality across all OECD
countries in final energy consumption per capita between 1980
and 2006 by studying the energy intensity and inequalities in total
consumption of energy for OECD countries on a per capita basis.
For the period considered, the final energy consumption per capita
of OECD countries has increased by 6.1% as a result of a 63.5%
increase in GDP per capita and a 35.1% decrease in the EI of GDP.
In their study, Kirikkaleli et al. (2023) examined the impact of
patents on the ecological footprint (EF) in the USA, while control-
ling for environmental compliance (EC) and gross domestic pro-
duct (GDP). They found that patents associated with
environmental technologies had a significant influence on EF and
led to a long-term reduction. Pata et al. (2023) analyzed the influ-
ence of financial development, economic growth, and biomass
energy on environmental quality for the USA during the period of
1965–2018 by using Fourier autoregressive distributed lag
approach and validated the environmental Kuznets curve for the
USA. Wu et al. (2018) investigated the EI across cities in China by
taking geographical location, population sizes, and environment-
related policies, and the results revealed population influences EI
significantly. Bilgili et al. (2017b) examined the EI by considering
the population in urban areas for 10 Asian countries from 1990
to 2014 and concluded that the population in urban areas nega-
tively influences the EI in both the short and long run. Chen et al.
(2016) investigated the relationship between EI and green
A. Rao and S. Kumar
technology for 29 provinces in China from 1999 to 2010 and found
a negative but long-run relationship between them. According to
Owusu and Asumadu-Sarkodie (2016), the decline in EI in OECD
countries was attributed to increased industrial energy efficiency
rather than the use of environmentally friendly energy sources.
3. Material and methods
3.1. Data specification
The primary objective of this study is to investigate the influ-
ence of green innovation, represented by the budget allocated to
environment-related technology, on EI. To achieve this, the
researchers collected annual data from two primary sources,
namely the OECD statistics and World Bank development indica-
tors databases. Table 1 presents the selected variables and their
respective sources. From the total of 36 OECD countries, a sample
of 23 countries was chosen based on data availability. The sample
period ranges from 1990 to 2021, determined by the availability of
data for the variables under consideration. The study utilized EI,
measured as total primary energy supply (TPES) per capita, as
the main dependent variable. Figs. 2(a) and 2(b) show the EI for
the sample of 23 countries. Several independent variables were
included, namely the percentage of renewable energy consump-
tion in total final energy consumption (REN), annual population
growth rate (POP), GDP per capita based on purchasing power par-
ity (GDPPPP) in current international dollars, and ICT capital deep-
ening (ICT). The key independent variable, green innovation (GI)
was proxied by the percentage of the government’s budget allo-
cated to environmentally related research and development
(R&D). It is important to note that EI is often utilized as a proxy
for energy efficiency, where higher values indicate greater energy
consumption for a given output unit, and vice versa. This relation-
ship is supported by existing literature studies (Mavi and Mavi,
2019; Paramati et al., 2022). The review of the literature highlights
several research gaps in the field of energy intensity. These include
a lack of studies on sector-specific factors influencing energy inten-
sity, limited research on renewable energy adoption and the role of
external factors, and insufficient exploration of the implications of
energy intensity reduction on economic growth, inequality, and
environmental sustainability. These gaps present opportunities
for future research to advance our understanding of energy inten-
sity and its impact on economies and the environment.
3.2. Construction of the model
Following the studies by Bashir et al. (2021) and Nurgazina et al.
(2022) on economic growth, Otsuka and Goto (2018), Rafiq et al.
(2016), Wu et al. (2018), and Sharif et al. (2023) on population,
Aslan et al. (2021), Ali et al. (2022), and Kartal (2023) on renewable
energy consumption, and Wang and Han (2016) and Dogan and
Pata (2022) on ICT, these factors are identified as key determinants
of EI.
Table 1
A brief of variables.
Variable Code Source
Energy intensity, TPES per capita EI OECD
Renewable energy consumption REN World Bank
(% of total final energy consumption)
Population growth (annual %) POP World Bank
GDP, PPP (current international $) GDPPPP OECD
ICT Capital Deepening ICT OECD
Green Innovation (R&D budget of ERT) GI OECD
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Building upon the findings of previous studies, our research
aims to develop an econometric model to assess the impact of GI
on EI. By incorporating relevant variables and employing rigorous
statistical analysis, we seek to estimate the specific role of GI in
influencing EI levels. GI is considered a key regressor. For this
study, we selected the variable because of their endogeneity in
an economy, as it’s possible that EI might be impacted by a multi-
tude of factors, e.g., increased awareness about technologies,
increased use of efficient equipment, and increase in affluence
level of the general population. As OECD countries derive a major
part of their energy from fossil fuels, which in turn increases the
environmental degradation, and increased use of natural resources.
In such a complex environment, policymakers might look for
enhanced spending on the development of green innovation to
improve energy intensity. Equation (1) shows the base model for
this study. Equation (1) derived its theoretical base from the field
of environmental economics, which studies the association
between the environment and economic activities. The key con-
cept of decoupling explains the ability of a country to achieve eco-
nomic growth without an equivalent increase in the degradation of
the environment. Within this framework, EI is a key component in
achieving decoupling since it allows for an increase in output (eco-
nomic growth) with energy reduction. The variables in the Eq. (1)
are all seen as potential key drivers of EI. As an illustration, the
intensity of energy consumption can be amplified by the escalation
of both population and economic growth due to heightened energy
demand. Conversely, EI can be curtailed through the utilization of
renewable energy and the advancement of green technology,
which offers alternative energy sources and more efficient meth-
ods of energy consumption.
EI ¼ f ðPOP; GDPPPP; REN; ICT; GIÞ ð1Þ
where, EI = Energy Intensity; POP = Population growth;
GDPPPP = Economic growth; REN = Renewable energy; ICT = Informa-
tion, communication technology; GI = Green innovation.
Eq. (2) becomes as after putting all the proxies in the model and
modifying it according to panel data.
EIi;t ¼ b0 þ b1 POPi;t þ b2 GDPPPPi;t þ b3 RENi;t þ b4 ICT i;t
þ b5 GIi;t þ li;t ð2Þ
Where, i refers to the country, t for the time period, li;t shows the
error term.
3.3. Econometric techniques
To check for cross-sectional dependence (CSD), we applied the
Lagrange Multiplier (LM) test proposed by Breusch and Pagan
(1980), the Scaled LM test and CD test developed by Pesaran
(2004), and the Bias-adjusted LM test introduced by Pesaran
et al. (2008). In the next step, we tested for slope heterogeneity
using the methods proposed by Pesaran and Yamagata (2008)
and Blomquist and Westerlund (2013). To test for unit root in
the panel data, we utilized the approach introduced by Lluís
Carrion-i-Silvestre et al. (2005), which accounts for structural
breaks. For this study, our primary methods included panel cointe-
gration tests with structural breaks, employing the methodology
outlined by Westerlund and Edgerton (2008). Additionally, we uti-
lized Quantile via moments analysis, as described by Machado and
Silva (2019). A concise explanation of both these techniques is pre-
sented in the subsequent subsections.
3.3.1. Panel-cointegration test
Westerlund and Edgerton (2008) proposed panel cointegration
tests considering both structural breaks and cross-sectional depen-
dence in both the intercept and slope. This test also accommodates
A. Rao and S. Kumar Geoscience Frontiers xxx (xxxx) xxx

Fig. 2a. Panel plot of energy intensity.

Fig. 2b. Panel plot of energy intensity.

heteroskedastic and serially correlated errors, as well as cross- where eit is i.i.d. as before. If qi ¼ 0; li;t is I (1), thus we can say the
unit-specific time trends. Simple panel cointegration tests, such association between yit and zit is spurious. If qi < 0, then they are
as those proposed by McCoskey and Kao (1998), Larsson et al. cointegrated i.e., having a long-term relationship. The statistics for
(2001), Westerlund (2005), and Pedroni (2004), are incapable of the same are calculated as follows Eq. (5):
addressing slope heterogeneity and CSD in addition to structural
breaks. According to Westerlund and Edgerton (2008), the null X
N
bi
q
LMtest ¼ N1
 ð5Þ
hypothesis does not support long-run carbon emission cointegra-
i¼1
bi
S:E: q
tion and its drivers, but an alternative hypothesis does.
More precisely, the test developed by Westerlund and Edgerton where q b it ¼ qi l
b i is obtained by fitting the model ui ðLÞD l b it1 þ eit
(2008) is written as follows Eq. (3): b it which is the residual obtained by evaluating the model of yit .
and l

0
yit ¼ ai þ F 0t hi þ bi t þ zti;t pi þ DMi;t zi;t si þ li;t ð3Þ
3.3.2. Method of moments quantile regression (MMQR)
In Eq. (4), DM i;t ¼ 1ðt > T i ) with T i indicates structural breaks for To address the distributional variations and heterogeneity
cross-section i, and zit follows an I(1) process. Assuming li;t follows across quantiles, we employed a panel quantile regression
the below-mentioned process. approach, as highlighted by Sarkodie and Strezov (2019). The foun-
ui ðLÞDlit ¼ qi lit1 þ eit ð4Þ dation of this method can be attributed to the pioneering work of
Koenker and Bassett (1978). Quantile regressions are valuable tools
6
A. Rao and S. Kumar
for estimating not only the conditional median but also a range of
quantiles for the response variables under specific values of the
exogenous variables. This is in contrast to regular least-squares
regressions, which primarily estimate the conditional mean of
the endogenous variable for specific exogenous values. Quantile
regressions exhibit greater resilience to outliers during the estima-
tion process and are particularly advantageous where the associa-
tion between the conditional means of observed variables is not so
strong or nonexistent, as noted by Binder and Coad (2011). For our
analysis, we utilized the Method of Moments Quantile Regression
(MMQR) with fixed effects, following the approach introduced by
Machado and Santos Silva (2019). The MMQR technique is specifi-
cally designed to account for the conditional heterogeneity and
covariance effects of energy intensity determinants. It allows indi-
vidual effects to influence the entire distribution, rather than solely
focusing on the means. This methodology has been demonstrated
by Koenker (2004) and Canay (2011). Moreover, the MMQR tech-
nique ensures that the regression quantiles estimated do not cross,
thereby providing reliable and interpretable results.
The estimation of the conditional quantiles Q Y ðsjX Þ for a model
of the location-scale variant represented as follow Eq. (6):


Y it ¼ ai þ X 0it b þ di þ Z 0it Y U it ð6Þ
  0 outliers, distributional asymmetries, measurement error, and
In Eq. (7), the probability, P di þ Z 0it c > 0 ¼ 1:ða; b0 ; d; c0 Þ are
parameters that we need to estimate. ðai ; di Þ; i ¼ 1;    ; n; shows
the individual i fixed effects, and Z is a k-vector of recognized com-
ponents of X, which are differentiable transformations with element
l given:
Z l ¼ Z l ðX Þ; l ¼ 1;    ; k ð7Þ
The variable X it in our model represents the independent and iden-
tically distributed variable for any fixed i, and it is also independent
across time (t). The variable U it , on the other hand, is independent
and identically distributed across individuals (i) and across time
(t). These variables are orthogonal to X it and satisfy the moment
conditions as specified by Machado and Silva (2019). It is important
to note that the moment conditions do not require strict exogeneity
in this context.
Eq. (8) represents the following:
Q Y ðsjX it Þ ¼ ðai þ di qðsÞÞ þ X 0it b þ Z 0it cqðsÞ ð8Þ
The vector X it in our study represents the independent variables,
which consist of the natural logarithm of POP (population),
GDP_PPP (Gross Domestic Product at purchasing power parity),
REN (renewable energy consumption), ICT (information and com-
munication technology), and ERT (environment-related technol-
ogy). The notation Q Y ðsjX it Þ represents the quantile distribution of
our dependent variable Y it (natural logarithm of energy intensity)
conditional on the values of the independent variable X it . The term
ai ðsÞ denotes the scalar coefficient that represents the quantile-s
fixed effect for individual i. It is calculated as the sum of the
individual-specific fixed effect ai and the product of the quantile-
s fixed effect di and the quantile-specific function qðsÞ:
3.3.3. Choice of MMQR
As a panel regression technique, the Method of Moment
Quantile-Regression (MMQR) is gaining popularity in empirical
research. From an economic and econometric standpoint, this
method is preferred over other panel regression methods for a
number of reasons. Economically, MMQR is favored because it
enables the modeling of different responses of the dependent vari-
able to changes in the independent variable. This is significant
because it recognizes that the impact of a specific variable on the
outcome of interest may vary depending on its position in the dis-
tribution of the outcome variable. This suggests that the relation-
7
Geoscience Frontiers xxx (xxxx) xxx
ship between the independent and dependent variables may vary
across subgroups of the population. Other panel regression
approaches cannot account for this heterogeneity in the relation-
ship, but MMQR can. MMQR is recommended over other panel
regression methods from an econometric standpoint because it is
more resistant to outliers and distributional asymmetries. Panel
regression models that rely on assumptions about the data distri-
bution, such as ordinary least squares (OLS) regression, may per-
form poorly when the data is skewed or contains outliers.
MMQR, on the other hand, does not necessitate any distributional
assumptions and can be utilized even when data contains outliers
or is highly skewed. In addition, MMQR is less prone to measure-
ment error and endogeneity issues than other panel regression
techniques. When the independent variable is measured with the
error or when there are unobserved variables that are linked to
both the independent and dependent variables, estimates from
panel regression models may be biased. Because it does not require
assumptions about the functional nature of the relationship
between the independent and dependent variables, MMQR is less
susceptible to these problems. Method of Moment Quantile-
Regression is preferred over other panel regression techniques
because it can model the diverse responses of the dependent vari-
able to changes in the independent variable and is less sensitive to
endogeneity issues.
4. Empirical findings and discussion
The statistical summary of the variables is presented in Table 2.
GDPPPP reported the highest mean value (x = 27.0414), followed
by GI (x = 2.3887). Our dependent variable EI reported a mean
value (x = 1.4163) with an Std. Dev. of 0.3834, indicating the distri-
bution of observations around the mean value is on the higher side.
The skewness values for REN and ICT are negative. In the case of
REN, the value is 0.5520, indicating a moderately skewed distri-
bution, whereas the ICT skewness value is 1.8446 suggesting a
highly skewed distribution. Kurtosis values for POP and ICT are
greater, indicating fat tails in the distribution and leptokurtic.
In Table 3, the analysis of the data series confirms the presence
of cross-sectional dependence, indicating that shocks occurring in
one country have spillover effects that extend to the entire panel
of countries. The results of the homogeneity tests reveal the exis-
tence of heterogeneity in the panel data, indicating that the coeffi-
cients of the model vary across countries and suggesting that the
slope differs among them. This heterogeneity in the panel data
implies that the socioeconomic structure pattern of one country
is not constrained by restrictions imposed by other countries. Fur-
thermore, the findings suggest that incorporating homogeneity
constraints into the conclusions drawn from the panel data would
lead to biased estimates. These results align with the study con-
ducted by Ahmad et al. (2020). Next, we performed stationarity
tests with structural breaks. We rejected the null hypothesis of sta-
tionarity at the 1% significance level, assuming homogenous and
heterogenous variances suggesting we should make proper adjust-
ments to account for the non-stationarity in our panel data.
In Table 4, we present the results of panel cointegration by
Westerlund and Edgerton (2008). To ensure the validity of the
results, we first applied the cointegration test without structural
breakdowns, followed by the level and regime shift tests. The data
at no break give no evidence of cointegration; however, both statis-
tics support the null hypothesis of cointegration at level breaks in
the panel cointegration test. However, only one of the statistics
supports the null hypothesis of cointegration when regime shift
is allowed. Since both statistics support the null hypothesis of coin-
tegration in the case of a level shift with consistent findings, we
A. Rao and S. Kumar Geoscience Frontiers xxx (xxxx) xxx

Table 2
Descriptive of the variables.

EI REN POP GDPPPP ICT GI

Mean 1.4163 2.3154 0.6896 27.0414 2.1956 2.3887
Median 1.3981 2.3461 0.5491 26.8297 2.2849 2.3348
Maximum 2.2439 4.1837 6.0170 30.7665 3.4002 17.6578
Minimum 0.4641 0.8174 1.8537 23.1595 2.2569 14.6645
Std. Dev. 0.3834 1.1002 0.6431 1.3854 0.6400 2.3247
Skewness 0.0434 0.5520 1.4497 0.1669 1.8466 0.4305
Kurtosis 2.3041 2.7091 10.2454 2.9364 10.3468 21.7487
Jarque-Bera 15.0806 39.9755 1867.6440 3.5418 2056.6500 10802.5100
p-value 0.0005 0.0000 0.0000 0.1702 0.0000 0.0000

Note: EI = log natural of EI, REN = log natural of REN, POP = log natural of POP, GDPPPP = log natural of GDPPPP, ICT = log natural of ICT, GI = log natural of ERT; ***p < 0.01,
**p < 0.05, p < 0.10.

Table 3
Results of diagnostic tests.

CSD tests Breusch-Pagan LM Pesaran scaled LM Bias-corrected scaled LM Pesaran CD

EI 3424.44*** 140.98*** 140.61*** 49.44***
REN 4374.03*** 182.00*** 181.63*** 54.55***
POP 1236.75*** 43.733*** 43.36*** 5.88***
GDPPPP 7864.27*** 338.36*** 337.99*** 88.66***
ICT 2235.31*** 88.124*** 87.75*** 40.33***
GI 1745.02*** 66.328*** 65.95*** 2.51**

Homogeneity tests P&Y (2018) B&W (2013)

Delta 23.871*** 21.145***
Adjusted Delta 27.038*** 23.950***

Unit root tests Stationarity test with structural Stationarity test with structural
breaks (homogeneous) breaks (heterogeneous)
EI 19.571*** 48.908***
REN 5.614*** 78.344***
POP 11.712*** 14.114***
GDPPPP 8.893*** 14.073***
ICT 5.424*** 8.913***
GI 6.067*** 15.373***

Note: EI = log natural of EI, REN = log natural of REN, POP = log natural of POP, GDPPPP = log natural of GDPPPP, ICT = log natural of ICT, GI = log natural of ERT; ***p < 0.01,
**p < 0.05, *p < 0.10.

Table 4 conclude that the series are cointegrated around a broken inter-
Panel Cointegration Test with a structural break (Westerlund and Edgerton, 2008). cept. After establishing the existence of a long-run cointegrating
LM s LM / relationship, the following step is to estimate the long-run equilib-
No break 0.420 1.05
rium relationship among the variables.
Level break 2.329** 1.623* Table 5 shows the results of the Method of Moments Quantile
Regime shift 1.401* 0.514 Regression (MMQR) with fixed effects, as proposed by Machado
and Silva (2019) and Fig. 3 shows the graphical representation of
***p < 0.01, **p < 0.05, *p < 0.10.
Quantiles via Moments’ results According to the results presented
in Table 5, the panel quantile regression estimates reveal that the
relationship between POP and EI is statistically significant and pos-

Table 5
Results of Quantiles via Moments.

POP GDP REN ICT GI const

0.1 0.0094 0.0555** 0.0198 0.0199 0.0097 0.5334
0.2 0.0496 0.0470** 0.0108 0.0143 0.0034 0.2132
0.3 0.1040** 0.0354** 0.0015 0.0068 0.0052 0.2209
0.4 0.1405*** 0.0277** 0.0097 0.0018 0.0109 0.5115
0.5 0.1592*** 0.0237* 0.0139 0.0008 0.0138* 0.6606*
0.6 0.1982*** 0.0154 0.0226 0.0062 0.0199** 0.9720**
0.7 0.2258*** 0.0096 0.0288* 0.0099 0.0243** 1.1915**
0.8 0.2586*** 0.0026 0.0362** 0.0145* 0.0294** 1.4532**
0.9 0.3029*** 0.0068 0.0461** 0.0206* 0.0364** 1.8066**
Location 0.160*** 0.023* 0.014 0.001 0.140* 0.673*
Scale 0.089*** 0.189* 0.0200* 0.012 0.013** 0.711**

Note: EI = log natural of EI, REN = log natural of REN, POP = log natural of POP, GDPPPP = log natural of GDPPPP, ICT = log natural of ICT, GI = log natural of ERT; ***p < 0.01,
**p < 0.05, * p < 0.10.

8
A. Rao and S. Kumar Geoscience Frontiers xxx (xxxx) xxx

Fig. 3. Graphical representation of Quantiles via Moments’ results.
itive in the 4th to 9th quantiles. This suggests that as population
increases, energy intensity tends to increase across these quantiles.
However, in the 1st to 2nd quantiles, the effect of population on
energy intensity is found to be insignificant, indicating that there
is no significant relationship observed in these lower quantiles.
The effect of POP on EI keeps on increasing from lower to higher
quantiles. The results validate that with the increase in population,
there is an increase in energy intensity, in line with the findings of
(Rafiq et al., 2016). Regardless of the concerns voiced by numerous
researchers, the global population has continued to rise, putting
greater strain on the consumption of energy. The sustainable solu-
tion must therefore take population management into account,
with the basic premise being that population growth should paral-
lel the rate of sustainable energy solutions. As population growth
momentum may overshoot, sustainable development may necessi-
tate a reduction in the population growth rate. The coefficient of
GDP is positive and statistically significant from the 1st to 5th
Quantile, whereas at higher quantiles (6th-9th), the coefficient is
statistically insignificant. This finding suggests that economic
growth is positively associated with energy intensity in BRICS
nations (Liu et al., 2022b). However, Mahmood and Ahmad
(2018) provide a different perspective, suggesting that high-
income countries, characterized as wealthy nations, tend to have
low energy intensity. They argue that this is due to the implemen-
tation of energy-saving and conservation policies, which result in
slower growth in energy consumption compared to GDP. In con-
trast to that, our research findings suggest that GDPPPP has a pos-
itive impact on energy intensity. This aligns with the findings of
Zhou et al. (2021), who observed that the extent of energy intensity
reduction varies depending on the stages of economic growth, con-
sidering key influencing factors such as energy consumption mix,
urbanization, industrial structure, and technological advancement.
Furthermore, the relationship between energy intensity and eco-
nomic growth is influenced by the level of national income.
According to Deichmann et al. (2019), their study suggests that
REN has a positive impact on reducing EI, with a more significant
Qureshi et al. (2020) revealed that ICT capital deepening has a pos-
itive impact on reducing EI in the United States. Renewable energy
policies in the Economic Community of West African States (ECO-
WAS) member states influence a positive effect on EI (Moustapha
et al., 2022). Renewable energy development has a large and neg-
ative influence on EI at higher levels of GDPPPP, and its marginal
effect increases with economic development (Liu et al., 2022a).
Our key variable, i.e., GI, has its coefficient statistically significant
from mid-quantile (5th) up to 9th Quantile with a negative sign
suggesting that with an increase in support of green innovations/
environment-related technologies from the policymakers, OECD
countries can meet their respective targets of energy intensity.
By considering a stock of green patents, (Wurlod and Noailly,
2018) found GI has contributed to the reduction in EI. Only the
composition effect cannot achieve the reduction in EI at the aggre-
gate level, i.e., a shift to cleaner economic sectors, but rather a
more efficient use of energy by enterprises.
Two primary sources of improvements within an industry are
input substitution and technological innovation. Input substitution
occurs when firms substitute energy with more labor or capital,
and technological innovation occurs when firms save energy by
employing new energy-efficient production techniques. Zhang
et al. (2023) emphasized the importance of improving EI through
the role of GI. The majority of countries witnessed improvements
in country-level energy intensity (EI) between 1995 and 2007,
which were primarily driven by technological progress. On the
other hand, structural change had a less significant impact during
this period (Voigt et al., 2014). Table 6 presents the robustness esti-
mation using the method proposed by Driscoll and Kraay (1998). In
Table 7, we showed the results of (Juodis et al., 2021). Bi-
directional causality exists between GDPPPP and EI, REN and EI,
and ICT and EI, whereas uni-directional causality runs from GI to
EI. In the case of POP and EI, no casualty was found.
Table 6
Results of robustness check using Regression with Driscoll-Kraay standard errors.
Technique Regression with Driscoll-Kraay standard
errors
EI = dependent variable Fixed-effects Random effects GLS
POP 0.16067* 0.1530*
GDP 0.1335* 0.1459**
REN 0.040** 0.020*
ICT 0.0476 0.01292*
GI 0.1461* 0.1449
Note: EI = log natural of EI, REN = log natural of REN, POP = log natural of POP,
GDPPPP = log natural of GDPPPP, ICT = log natural of ICT, GI = log natural of ERT;
***p < 0.01, **p < 0.05, *p < 0.10.
Table 7
Results of Granger non-causality.

effect observed at higher quantiles. This finding is consistent with Null Hypothesis: Result
several existing studies that have demonstrated a positive relation- POP does not Granger-cause EI ✗
ship between renewable energy consumption and energy effi- EI does not Granger-cause POP ✗
ciency. For instance, a study by Farhani and Shahbaz (2014) GDP does not Granger-cause EI U
found that renewable energy consumption has a significant effect EI does not Granger-cause GDP U
REN does not Granger-cause EI U
on reducing energy intensity in Algeria, while Ahmad and Zhao
EI does not Granger-cause REN U
(2018) demonstrated a similar relationship between renewable ICT does not Granger-cause EI U
energy and energy intensity in China. Furthermore, the study EI does not Granger-cause ICT U
reveals that ICT also has a positive and statistically significant ERT does not Granger-cause EI U
influence on reducing energy intensity. However, the effect is EI does not Granger-cause ERT ✗

found to be more pronounced at higher quantiles. This result is Note: EI = log natural of EI, REN = log natural of REN, POP = log natural of POP,
consistent with earlier studies that have found a positive relation- GDPPPP = log natural of GDPPPP, ICT = log natural of ICT, GI = log natural of ERT;
ship between ICT and energy efficiency. For example, a study by ***p < 0.01, **p < 0.05, *p < 0.10.

9
A. Rao and S. Kumar
5. Conclusion and policy implications
In order to meet SDG 7.3 (By 2030, the objective is to achieve a
doubling of the global rate of improvement in energy efficiency),
policymakers, energy regulators, and energy economists are trying
to understand the underlying determinants of how to improve the
energy intensity and achieve the SDG 7.3 target. Pal et al. (2022)
conducted a study on aerosol concentrations and temperature
changes in four Indian megacities during the specified period.
The findings revealed a significant improvement in air quality
and a decrease in temperature. The study attributed the highest
decrease in PM2.5 emissions to restricted vehicular movement.
These positive results may encourage policymakers to consider
such measures for environmental sustainability. Governments
have to allocate much-needed resources in terms of financial
grants and direct budgetary allocation to the development of green
innovation/environment-friendly technologies. Given all these
backdrops, this study was planned to examine the role of green
innovation on energy intensity for a set of 23 OECD countries for
a period of 32 years. Our sample consists of data from 1990 to
2021 and deployed robust panel econometric techniques like panel
cointegration test with structural breaks and Moment of Quantile
methods.
Consequently, we consider the estimated results to be more
reliable and robust. The results confirmed the role of green innova-
tion in meeting the SDG 7.3 target and reducing the energy inten-
sity for the selected countries. These results revealed that
budgetary support from the policymakers/governments plays an
important role in reducing the demand from energy sectors and
achieving energy intensity. Further, evidence showed that popula-
tion growth also increased energy intensity, whereas economic
growth and renewable energy consumption influence energy
intensity at lower and higher quantiles.
According to our findings, the government can play a crucial
role in promoting green innovation and strengthening the energy
structure. Specifically, the government should support enterprises
and scientific researchers involved in green innovation to reduce
energy intensity and improve the patenting system for these tech-
nologies. Given the long gestation period and high risks associated
with such technologies, the government can introduce tax breaks,
policy support, and other incentives to encourage investment in
this field. While promoting green innovation, policymakers should
also pay significant attention to the influence of population growth
and affluence on energy intensity. Our study suggests that manag-
ing population growth to parallel the rate of sustainable energy
solutions is crucial for sustainable development. This is because
population growth is positively associated with energy intensity,
and a reduction in the population growth rate can prevent putting
greater strain on energy consumption. Moreover, supporting green
innovations and environment-related technologies can help coun-
tries achieve their energy intensity targets. Thus, policymakers
should invest in the research and development of such technolo-
gies to promote their adoption by industries. Tax incentives, subsi-
dies, and other policies that encourage industries to adopt
sustainable and energy-efficient technologies can facilitate this
process. Such an approach not only improves energy intensity
but also promotes economic growth.
6. Limitations of the study
This study has certain limitations that should be considered.
Firstly, it only examines a sample of 23 OECD countries, which
may restrict the generalizability of the findings to countries with
different economic and social conditions. Secondly, the study does
not account for potential trade-offs and conflicts that may arise
10
Geoscience Frontiers xxx (xxxx) xxx
between promoting green innovation and other policy objectives,
such as economic growth and job creation, which can have varying
priorities in different countries. Thirdly, the study primarily
focuses on the role of government support for green innovation
in reducing energy intensity, potentially overlooking the influence
of other factors such as market competition, consumer behavior,
and international cooperation in driving the adoption of sustain-
able energy technologies.
CRediT authorship contribution statement
Amar Rao: Conceptualization, Methodology, Formal analysis,
Investigation, Writing – original draft, Writing – review & editing.
Satish Kumar: Supervision, Methodology, Writing – review &
editing.
Declaration of Competing Interest
The authors declare that they have no known competing finan-
cial interests or personal relationships that could have appeared
to influence the work reported in this paper.
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