Energy innovation in the Environmental Kuznets Curve (EKC): A theoretical approach

Abstract

This chapter presents the relationship between economic growth and environmental pollution through the theoretical hypothesis of the Environmental Kuznets Curve (EKC). Moreover, it attempts to illustrate the impact of renewable energy sources and energy Research, Development and Demonstration (RDD) on environmental degradation in countries around the world. Many studies have confirmed the existence of an inverted N-shaped EKC pattern in the relationship between income level and the environmental degradation process. These results also indicate that energy regulation processes delay technological obsolescence once economies have reached the early stages of the decontamination process, which, in the long-run, means that an increase in income threshold is required before there can be a return to rising pollution levels. Furthermore, this chapter explains the environmental pollution process through an analysis of low-carbon technologies. It also introduces how income levels affect energy consumption and explains how higher energy demand leads to a larger share of fossil sources in energy mix and, thus, an increase in greenhouse gas (GHG) emission levels. Finally, this chapter offers an empirical approach to the positive impact that energy innovation policies exert over the replacement of polluting sources with renewable ones and explains how these measures help to control environmental pollution levels. In addition, Administrations’ regulatory policies help to delay technical obsolescence and also control the scale effect that causes economies to return to increasing pollution levels. Although the promotion of energy innovation actions has a direct impact on the reduction of GHG emissions, this chapter concludes that, in the long-term, it is necessary to continue implementing energy innovation measures to delay technical obsolescence and, thus, delay the return to a stage of increasing GHGpc emissions. © 2017, Springer International Publishing AG.