Transitioning towards Low Carbon Economy: Role of Renewable Energy, Economic Growth and FDI in Achieving SDGs

Abstract

As global concerns about environmental degradation continue to rise alongside rapid economic development, the United Nations introduced the sustainable development goals (SDGs) to address these challenges by 2030. This study examines the interconnections between economic growth, foreign direct investment (FDI), renewable energy, and environmental degradation, focusing specifically on SDGs 7, 8, 10, and 13. Using the generalized method of moments (GMM) technique, we analyze panel data from the G-10 countries for the period 2012-2020. The findings reveal that renewable energy contributes to reducing CO2 emissions, thereby supporting the achievement of SDG 7 (affordable and clean energy) and SDG 13 (climate action). However, increases in FDI and economic growth are associated with higher CO2 emissions. These results suggest that G-10 countries need to reassess their policies related to FDI and economic growth to ensure alignment with SDGs 8 (decent work and economic growth), 10 (reduced inequalities), and 13. Based on these findings, the study recommends policy adjustments for G-10 countries to better integrate sustainability into their economic strategies and contribute to global SDG targets.

Keywords

• Environmental Sustainability, Financial Development, CO2 Emissions, Economic Growth, Renewable Energy Use, Sustainable Development Goals