Green Investment as a Buffer: Analyzing the Economic and Environmental Impacts of Non-Renewable Energy Consumption in G20 Countries

Abstract

The G20 countries are among the world's fastest-growing economies. However, they are also major contributors to environmental degradation, as most of them rely heavily on non-renewable energy sources to support economic growth. This study investigates the moderating role of green investment in the relationships between non-renewable energy consumption, economic growth and environmental degradation in G20 countries. A panel data approach was used to analyze data from G20 countries for the period 2010 to 2023. The study employed the panel-corrected standard error (PCSE) method as the main estimator, supplemented by a feasible generalized least squares (FGLS) model for robustness checks. Additionally, to address endogeneity in panel data, a one-step system generalized method of moments (GMM) regression was used, which provides consistent estimates in dynamic panels. The findings indicate that non-renewable energy consumption has a significant positive effect on economic growth but also significantly increases environmental degradation. Furthermore, the moderation results show that green investment strengthens the positive effect of non-renewable energy consumption on economic growth and reduces its negative environmental effects. Hence, policymakers in G20 countries should promote green investment initiatives to mitigate the environmental challenges associated with the consumption of non-renewable energy resources.