Oil rents and environmental sustainability: Do green technologies and environmental technological innovation matter?

Abstract

Sustaining the environment is essential for Saudi Arabia, especially given the country’s high dependence on oil rents. While these rents have historically fueled economic growth, they have also contributed significantly to environmental degradation. Sustainable resource use and a transition from conventional to renewable energy sources are essential for achieving carbon neutrality and keeping the upsurge in global temperature below 2°C. In addition, sustainable practices help to preserve ecosystems, biodiversity, and natural resources, which are essential for the survival of all living organisms. Consequently, this study fills a significant empirical gap by investigating the moderating effects of technological innovation, environmental innovation, and green energy technologies in the oil rents and environmental sustainability nexus in Saudi Arabia from 1990 to 2022. Although there are significant direct associations between oil rents and environmental sustainability, the existing literature has not investigated empirical research on the moderating effects of technological innovation, environmental innovation, and green energy technologies in the oil rents and environmental sustainability nexus. To do this, the study implements the model of dynamic AutoRegressive Distributed Lag (ARDL) simulations. The results indicate that rising oil rents, economic growth, trade, and urbanization in Saudi Arabia worsen environmental sustainability while increasing green energy technologies, technological innovation, and environmental innovation enhances environmental sustainability. Interestingly, the findings of the moderating effects of technological innovation, environmental innovation, and green energy technologies in the oil rents and environmental sustainability nexus show that the predicted coefficients of the multiplicative interaction terms are both positive and statistically significant. This demonstrates that these technologies play crucial roles in mitigating the negative effects of oil rents on environmental sustainability in Saudi Arabia. Based on the outcomes, promoting technological innovation, prioritizing investments in green sources and reducing dependence on natural resource extraction are key policy recommendations that can significantly bolster environmental sustainability in Saudi Arabia.

Keywords

• Sustainable natural resource
• Environment sustainable
• Green technology
• Innovation policies
• Sustainable development