Find in Library

To better understand the impact of the energy transition on the environment, this study examines the impact of structural changes in energy (renewable), economy (industrialization), society (urbanization), and trade (trade openness) on environmental degradation in lower-middle-income, upper-middle-income and high-income countries and regions between 1995 and 2014. The econometric model consists of the ecological footprint as a proxy variable for environmental degradation, as the explained variable, and the explanatory variables are simultaneously set as threshold variables in the proposed panel threshold regression model. The results for all countries show an inverted U-shaped relationship between renewable energy and ecological footprint. The results from the panel of income groups indicate that the offsetting effect of renewable energy on the ecological footprint is most significant in the upper-middle-income and lower-middle-income countries, while the development of renewable energy can effectively mitigate environmental degradation in these two income groups. Urbanization and trade freedom contribute significantly to the increased ecological footprint of the three income groups, while industrialization contributes insignificantly. Thus, in the context of an increasingly diverse energy transition, the study suggests policy guidelines for countries and regions in the three income classifications, particularly for lower-middle-income and upper-middle-income economies.