Deciphering the Dynamics of Economic Development and Green Energy: An In-depth Analysis of OECD Nations

Abstract

Worldwide, fossil fuel is employing to achieve the sustainability in the long term which is considered the main source of climate change and environmental degradation. Therefore, renewable energy is encouraging to develop and adopt alternative methods of power generation. This study aims to investigate the impact of economic development, trade openness, and technological progress on the adoption of green energy in OECD countries. For this objective a panel dataset of OECD is organized spanning from 1979-2022. Further, Fully Modified OLS and Dynamic OLS are employed to spotlight the fluctuating relationship among the parameters. The findings indicate that these factors have a dynamic and fluctuating relationship, with economic development fostering long-term adoption of green energy but impeding it in the short term. The study underscores the significance of international trade and technological advancement in advancing renewable energy use, with technological progress playing a crucial role in OECD countries. Ultimately, the research concludes that there is a substantive connection between economic growth, free trade, technological advancement, and green energy use in these countries. This study suggested that implementing policies that encourage trade openness, technological innovation, and sustainable economic development is essential to achieving ambitious renewable energy objectives and reducing carbon emissions.