The Impact of Socio-economic and Environmental Sustainability on CO₂ Emissions: A Novel Framework for Thirty IEA Countries

The extent to which socio-economic factors other than income and household size are associated with household CO₂ emissions and whether associations vary across emission domains remains contested in the literature. We explore the impact of socio-economic and environmental sustainability indicators on CO₂ emissions in the presence of combustible renewables, and the economic growth of thirty International Energy Agency (IEA) member countries. We develop a comprehensive empirical analysis using panel data and apply advanced econometric techniques for the period from 1995 to 2018. The panel co-integration analysis indicates long-run relationships among the variables. In addition, augmented mean group analysis and common correlated effects mean group analyses explain that environmental sustainability reduces CO₂ emissions in the short run. Findings of fully modified least square estimates and long-run dynamic least squares estimates confirm that socio-economic sustainability increases CO₂ emissions and environmental sustainability decreases them. The results of Dumitrescu and Hurlin Granger causality analysis reveal that combustible renewables, environmental sustainability, and economic growth bidirectionally Granger cause CO₂ emissions, but socio-economic sustainability unidirectional Granger causes environmental quality. Policymakers in the IEA economies are encouraged to establish policies that promote a sustained lifestyle, ecological awareness, clean technological innovations, limit CO₂ emissions, ecological trade-offs, and CO₂ emissions ceilings to avoid rebound effects and limit environmental degradation. The study’s limitations are discussed, and useful directions for future research in the area are proposed.