The Impact of Energy Efficiency and Renewable Energy R&D Spending on Environmental Quality: Evidence from Germany by Cross-Quantilogram Approach

Abstract

With the industrial revolution, the consumption of fossil fuels has increased, which has led to environmental pollution. To tackle this problem, various meetings have been held in different eras, and these meetings continue to be held. Increasing the share of renewable energy (REN) sources in total energy and energy efficiency are among the most important decisions taken at the meetings close to the present. In this context, this study analyzes the impact of energy efficiency (EEF) and REN Research and Development (R&D) spending in Germany on the load capacity factor, covering the period 1971Q1-2022Q4 a recently developed comprehensive environmental indicator. The study uses the recently developed cross-quantileogram method. The results of the analysis show that the LCC hypothesis is valid in Germany, i.e. environmental quality (EQ) decreases with increasing economic growth, but starts to increase after a certain turning point. Furthermore, while EEF and REN R&D spending have no impact on EQ in the short term, pollution decreases in the long term as a result of this spending. The results indicate that Germany can benefit from EEF and REN to ensure a sustainable economy and improve EQ. Germany should therefore continue to pursue strategies to increase EEF and provide additional funding for research and development in the field of renewable energies in order to promote sustainable economic development.