Simultaneous Effect of Innovation, Renewable Energy Consumption, and Primary Energy Resources on Pollution (Case Study: Iranian Economy)

Abstract

Due to the importance of economic relations and environmental potential issues, the relationship between economic growth and environmental degradation is a very important issue. Therefore, understanding the relationship between GDP growth, consumption and extraction of fossil fuels, use of renewable energy, and emissions in the Iranian economy are very important for sustainable development. In this study, we try to investigate how emissions (as the main cause of pollution) are affected by per capita income growth, innovation, renewable energy consumption, and extraction from non-renewable energy resources in a model with four equations (for Iran in period 1979 to 2019). By reviewing the wide range of studies, the framework developed in this paper has not been investigated in domestic or international studies. On the other hand, in this research, for estimating nonlinear simultaneous equations, the multi-objective optimization method and its application for estimating simultaneous equations in econometrics have been developed. (This method can be a way to estimate nonlinear simultaneous equations in future studies). The results showed innovation activities have not been able to have a significant effect on reducing pollution emissions for the Iranian economy. Also, we found out the consumption of renewable energy has not had a significant effect on reducing pollution emissions. Also, the existence of the Kuznets environmental hypothesis was confirmed and Iran is in the upward part of this curve.

Keywords

• renewable energy
• kuznets environmental curve
• innovation
• primary energy resources
• multi-objective optimization method
• simultaneous equations system