Effect of Economic Policy Uncertainty on Co2 With the Discrimination of Renewable and Non Renewable Energy Consumption

Abstract

The link between policy -related economic uncertainty and the environment has a new and developing literature. In this study, the effects of economic policy uncertainty, energy consumption and economic growth on pollution in G7 countries are investigated by using methods of moments quantile regression over the perod of 1995-2018. According to the long run coefficient estimation results, in the model in which the fossil fuel energy consumption variable is used as an energy consumption indicator, economic policy uncertainty has a reducing effect on emissions at all quantile levels. Although this negative effect becomes more pronounced as the quantile level increases, it is statistically insignificant at the 0.90 quantile level. In the model that includes fossil fuel energy consumption, the coefficient of economic policy uncertainty variable is negative in all quantiles and is significant only at the 0.30 and 0.40 quantile levels. In addition, while a U-shaped relationship is detected between economic growth and emissions in these countries, the destroying effect of fossil fuel energy on environmental quality is confirmed in all quantiles. Thus, it should be a priority to support the developments in growth performance with environmental regulations, encourage energy -saving and energy -efficient practices as well as to establish the legal infrastructure.