Enhancing environmental quality in the United States by linking biomass energy consumption and load capacity factor

Abstract

This study analyzes the impact of biomass energy, financial development, and economic growth on environmental quality using the novel Fourier autoregressive distributed lag (ARDL) approach on annual data for the period 1965–2018 in the United States (USA). The study analyzes the impact of related variables on the load capacity factor (LCF) as well as on indicators of environmental degradation such as carbon dioxide emissions and ecological footprint. The LCF is one of the most comprehensive environmental indicators to date, encompassing both biocapacity and ecological footprint. In this regard, this study contributes to the environmental economics literature by examining, for the first time, the impact of biomass energy on the LCF. The results of the cointegration test show that there is only a long-run relationship between the LCF and the independent variables. According to the Fourier ARDL results, biomass energy improves the environmental quality, while financial development has no effect on the LCF. Moreover, the increase in per capita income reduces the LCF. Furthermore, since the income elasticity is larger in the long run than in the short-run, the environmental Kuznets curve is validated. Therefore, the United States government should encourage the use of biomass and investment in this form of energy.