Clean energy production index and CO2 emissions in OECD countries

This study aimed to analyze the relationship between the energy transition index recently developed by Lau et al. (2023) and CO2 emissions in OECD countries. The topic is relevant, as the energy transition is a sustainable path to reduce CO2 emissions in countries. The CS-ARDL approach is used to estimate the short-run and long-run coefficients. Additionally, the Dumitrescu and Hurlin (2012) test is employed to determine the causal relationship between the variables. It was found that a 1 % increase in clean energy production reduces CO2 emissions by 0.33 % and 0.23 % in the short and long run, respectively. Furthermore, a bidirectional causal relationship exists between CO2 emissions and the energy transition indicator. This suggests that policies implemented by OECD countries to reduce carbon emissions will inevitably entail the adoption of cleaner energy sources.