Abstract This study investigates the heterogeneous and quantile-dependent impacts of eco-taxation on renewable energy transition and economic growth in the United Kingdom. Using quarterly data from 1997 to 2022, the analysis employs the Quantile-on-Quantile Regression (QQR) and Quantile-on-Quantile Granger Causality (QQGC) methods to capture nonlinear and asymmetric interdependencies between energy, transport, and pollution resource taxes and the dynamics of renewable energy and GDP. The results reveal that energy and transport taxes exert consistently positive effects on renewable energy across medium to upper quantiles, suggesting their strong role in accelerating the energy transition under conditions of higher energy demand and greater renewable capacity penetration. Pollution resource taxes exhibit mixed but increasingly positive impacts in higher quantiles, indicating that their effectiveness strengthens as economies advance along the transition curve and adopt cleaner technologies. For economic growth, the effects of eco-taxation are nonlinear and vary across output levels. Energy and transport taxes promote GDP growth at lower and middle quantiles, suggesting countercyclical potential during periods of slower output, while their effects become neutral or mildly positive at higher quantiles, suggesting stabilisation rather than suppression of growth during expansionary phases. Pollution taxes show positive contributions to GDP at the upper quantiles, affirming their role in enhancing productivity and innovation in mature economies. The QQGC results confirm unidirectional causality from eco-taxes to renewable energy and bidirectional causality between eco-taxes and GDP. This study concludes that well-calibrated, transparently administered, and revenue-recycled eco-taxes can jointly foster renewable energy expansion and sustain long-term low-carbon economic growth in the United Kingdom.
Akadiri et al. (Sat,) studied this question.