Economic Growth, Globalization, Renewable Energy, and Trade Openness as Drivers of Carbon Emissions in the United States: Evidence Under Non-Normal Errors

In this study, carbon emissions determinants are examined in the United States using annual data from 1990 to 2020. Explanatory variables in the empirical model are economic growth, globalization, renewable energy consumption and trade openness. Unit root tests without and with structural breaks show that all variables are incorporated of order one, I (1). It is confirmed that the long-run relationship exists with the Bayer and Hanck combined cointegration approach and the Residual Augmented Least Square Engle-Granger (RALS-EG) cointegration test, respectively. Results indicate that CO2 emissions increase with economic growth and globalization whereas renewable energy consumption reduces emissions. Trade openness has an effect across model specifications. Trade openness reduces emissions of carbon in the constant model but raises emissions in the constant-with-trend specification, so it may have an environmental impact depending on underlying economic conditions as well as structural changes over time. Overall, the findings imply that renewable energy can help restrict long-term carbon emissions. They also point out that economic growth, globalization and trade openness may have environmental consequences when designing policies for sustainable development and emission reduction.