The role of renewable energy, alternative and nuclear energy in mitigating carbon emissions in the CPTPP countries

Abstract The paper investigates the role of renewable energy and alternative and nuclear energy in mitigating CO2 emissions. Trade openness is added to consider its effect on the environment, as it appears to be a crucial factor in interregional cooperation and development. We adopt a sample of nine signatories to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) from 1971 to 2014. Various time-series econometric methods are utilized including two long-run estimators - fully modified ordinary least squares (FMOLS) and dynamic ordinary least squares (DOLS) - and a Granger-causality test. Several noteworthy findings are achieved from this paper. First, the inverse U-shaped relationship is found in six countries: Australia, Canada, Chile, New Zealand, Peru and Vietnam. The U-shaped relationship is found in Japan and Malaysia whereas no evidence is observed in Mexico. Second, the adoption of either renewable energy or alternative and nuclear energy would mitigate CO2 emissions and trade openness plays an important role in facilitating this effect. Third, the directions of Granger causality among the variables of interests including consumption of renewable energy; consumption of alternative and nuclear energy, trade openness and CO2 emissions, do vary across countries and between the short term and the long term.