Technological Innovation and Trade Orientation as Drivers of Renewable Energy Consumption: Panel Evidence from G7 Economies

Abstract

Recent advancements in industrialization have sparked substantial interest among the academic community and policymakers regarding energy consumption. The consumption patterns of distinct energy types seem to be influenced by many national and international factors. In this essence, this study investigates the effects of technological innovation and trade orientation on renewable energy consumption (REC). Using panel data from G-7 economies from 2000 to 2019, Panel EGLS (estimated generalized least square) and ARDL (autoregressive distributed lag) models are employed to check the regression. The analysis reveals that both technological innovation and export orientation have a significant and positive impact on REC. In contrast, import orientation negatively affects REC. The results highlight that technological advancements and a focus on export-oriented trade strategies can significantly boost REC. Policymakers are encouraged to invest in research and development to advance renewable energy technologies and provide incentives for their adoption. These measures are crucial for achieving environmental sustainability and reducing pollution. The study provides valuable insights into how national and international trade dynamics influence renewable energy usage.