TY - JOUR
T1 - The effect of clean energy investment on CO2 emissions
T2 - Insights from a Spatial Durbin Model
AU - Weng, Chunfei
AU - Huang, Jingong
AU - Greenwood-Nimmo, Matthew
N1 - Publisher Copyright:
© 2023 The Author(s)
PY - 2023/10
Y1 - 2023/10
N2 - We estimate the direct and indirect effects of clean energy investment on carbon emissions using a Spatial Durbin Model fitted to a panel of 72 countries from 2000 to 2018. We find that a 1 percent increase in domestic clean energy investment reduces domestic carbon emissions by approximately 0.05 percent on average, controlling for country characteristics. However, this benefit is offset by a carbon leakage effect, whereby a 1 percent increase in clean energy investment among neighboring countries leads to about a 0.28 percent increase in domestic carbon emissions. This is suggestive of the outsourcing of pollution from one country to another and indicates that ad hoc policies to promote clean energy investment may be ineffective in achieving global emissions abatement. We conclude that a coordinated international policy framework is required to prevent jurisdiction-shopping by polluters.
AB - We estimate the direct and indirect effects of clean energy investment on carbon emissions using a Spatial Durbin Model fitted to a panel of 72 countries from 2000 to 2018. We find that a 1 percent increase in domestic clean energy investment reduces domestic carbon emissions by approximately 0.05 percent on average, controlling for country characteristics. However, this benefit is offset by a carbon leakage effect, whereby a 1 percent increase in clean energy investment among neighboring countries leads to about a 0.28 percent increase in domestic carbon emissions. This is suggestive of the outsourcing of pollution from one country to another and indicates that ad hoc policies to promote clean energy investment may be ineffective in achieving global emissions abatement. We conclude that a coordinated international policy framework is required to prevent jurisdiction-shopping by polluters.
KW - CO emissions
KW - Carbon leakage effect
KW - Clean energy investment
KW - Spatial Durbin model
UR - http://www.scopus.com/inward/record.url?scp=85171183009&partnerID=8YFLogxK
U2 - 10.1016/j.eneco.2023.107000
DO - 10.1016/j.eneco.2023.107000
M3 - Article
SN - 0140-9883
VL - 126
JO - Energy Economics
JF - Energy Economics
M1 - 107000
ER -