Mitigating human-induced emissions in Argentina: role of renewables, income, globalization, and financial development

Abstract

Achieving environmental sustainability has become a global initiative while addressing climate change and its effects. However, the role of energy production and consumption in economic development remains critical amidst environmental pollution. Thus, the need for innovation and clean energy alternatives is critical while pursuing sustainable development. This country-specific study focuses on Argentina, where economic growth trajectory is embedded with high CO2 emissions. This study assesses the long-term and causal impact of financial development and renewables on environmental pollution while accounting for the role of economic development and globalization using yearly data spanning 1980 to 2017. A battery of econometric methods is applied to underscore the interaction between the parameters of interest. The findings of Maki and ARDL tests of cointegration alongside Kripfganz and Schneider critical approximation p-values affirm long-run equilibrium interaction between variables. The outcomes of autoregressive distributed lag, fully modified, and dynamic ordinary least squares demonstrate that while economic expansion dampens environmental quality—globalization and renewables improve the environment. This finding suggests pollution-driven economic growth trajectory in Argentina with high dependence on fossil fuels. Besides, the gradual shift causality test finds evidence of one-way causality from renewable energy consumption, economic growth, and globalization to CO2 emissions. Argentina’s pathway in achieving sustainable development requires gradual and inclusive economic shift towards green growth.