Enhancing climate action in OECD countries: the role of environmental policy stringency for energy transitioning to a sustainable environment

Abstract

Abstract Climate change affects the world economy, environment, and human well-being, jeopardizing overall sustainability. The escalating impacts of climate change emphasize the necessity to assess the moderating influence of environmental policy stringency (EPS) on the association of energy transition (ET) and GHG emissions from 1990 to 2020 across 36 OECD countries. Further, this study incorporates the direct impact of energy transition (ET), environmental-related technology (ERTs), green innovation (INV), and Gross Domestic Product (GDP) on GHG emission. For this purpose, study employs an extensive range of econometric techniques, including DOLS, FMOLS, CCR, and MMQR approaches to evaluate data attributes. The findings of MMQR demonstrate that interaction of ET*EPS contributes to lower GHG emissions from −0.271% to −0.300% across all quantiles (20th to 80th). This indicates that the implementation of environmental policies fosters adoption of energy transitions to mitigate the negative effects of climate change, particularly to reduce GHG emissions. Further, environmental-related technologies (ERTs) and green innovation (INV) decrease GHG emissions by 0.15%–0.13% and 0.967%–2.049%, respectively, across all quantiles, thus encouraging environmental sustainability. The heterogeneous effect of ERTs is due to varying levels of adoption of environmental technologies in sample countries. The findings highlight the crucial need for integrating environmental policy strictness and energy transition measures to effectively mitigate GHG emissions. It highlights the significance of adaptive, responsive policies that are in line with SDGs 7 & 13, which concentrate on sustainable energy practices and integrated climate action in OECD economies. Graphical Abstract

Keywords

• Environmental policy stringency
• Energy transitions
• Green innovation
• DOLS
• FMOLS
• MMQR