Investigating the asymmetric impact of renewable energy consumption and trade openness for carbon emission abatement: A case of India

Abstract The present study tests the Environment Kuznets Curve (EKC) for India incorporating important macro-economic variables - industry value added (IVA) and trade openness that will address how a structural change in the Indian economy (represented by IVA) is affecting environmental conditions along with other macro-economic variables per-capita GDP and renewable energy consumption. In most of the previous studies trade, openness, and industry value added were not included which are the most important variables affecting CO2 emission along with per-capita GDP and renewable energy consumption Most importantly, the asymmetric impact of renewable energy consumption and trade openness in the pathway of carbon neutralization in India has not yet been studied in the existing body of literature. Thus, we have applied a nonlinear ARDL (asymmetric ARDL) test to provide some policy-oriented guidelines in the context of India. The presence of EKC is further established by our study while examining the asymmetric impact of trade openness and renewable energy consumption in the pathway of correction of CO2 emissions over the period of 1970–2019 for India by utilizing non-linear ARDL techniques. The positive shock of renewable energy reduces CO2 emission while the negative shock intensifies emission. Investigating the positive shock of trade openness, it is found that CO2 emission increases the negative shock of trade openness pacifies emission. Structural change in the Indian economy leads exacerbate CO2 emissions both in the short and in long run. Jel classification: C15, F18, O44, P18, Q56