Conference Agenda

This study investigates the relationship between income and CO₂ emissions by integrating the role of renewable energy (RE) deployment into the Environmental Kuznets Curve (EKC) framework, using panel data from 76 countries over the period 1990-2021. Its contribution is threefold. First, it provides updated and disaggregated estimates of income elasticity of RE deployment, revealing strong and significant elasticity in high-income countries (0.80) and upper-middle-income countries (0.49), but a negligible and statistically insignificant elasticity in lower-middle-income economies (-0.01). These results indicate that income growth alone does not drive RE deployment in low-income countries, where structural and institutional constraints persist. Second, adopting a novel counterfactual analysis, this study quantifies that global emissions would have been substantially higher without RE deployment, particularly in high-income economies. Using counterfactual scenarios, we find a one-unit increase in the wind FIT-to-electricity price ratio is associated with approximately 0.45 to 0.6 tonnes of CO₂ avoided per capita annually in high-income countries. Third, among economies beyond the EKC turning point, CO₂ emissions are driven not by income growth but by structural and technological factors, with a larger service-sector share and greater RE deployment significantly lowering per-capita emissions. Specifically, a one-percentage-point increase in the service sector’s share of GDP reduces CO₂ emissions per capita by about 1%, while a 1% increase in RE per capita lowers emissions by approximately 0.14%. Overall, the results underscore that RE is not a passive outcome but a central lever for CO2 emissions reduction.