The impact of renewable energy on decoupling economic growth from ecological footprint – An empirical analysis of 166 countries

It has been proven that mankind has achieved economic prosperity at a huge environmental cost. However, if the ecological footprint cannot be controlled at the same time, economic growth will not be maintained. This work takes 166 countries (divided into high-income countries, upper-middle-income countries, lower-middle-income countries, and low-income countries) as examples to analyze the nexus between renewable energy consumption, population aging, and decoupling economic growth from ecological footprint. This study uses the second-generation econometric methodological framework of panel data to effectively solve the problems of transnational heterogeneity and cross-sectional dependence. The results indicate that the decoupling between economic growth and ecological footprint showed an improvement trend from 1990 to 2015, and finally maintained a weak decoupling. Among them, upper-middle income countries improved the earliest (2003), and low-income countries improved the latest (2009). The evidence of the inverted U-shaped nexus between economic growth and ecological footprint shows the validity of the Ecological Kuznets Curve globally. However, this nexus is not significant in low-income countries. Importantly, renewable energy consumption can reduce the ecological footprint globally in the long run. Furthermore, this reduce effect is stronger in low income and lower-middle income countries than in high-income and upper-middle-income countries. Population aging, financial development and trade openness all contribute to the reduction of the ecological footprint. Among them, the effect of population aging is more significant than financial development and trade openness. Based on the results, comprehensive policy implications were put forward so that these countries can achieve the decoupling economic growth from ecological footprint.