Testing environmental Kuznets curve for the USA under a regime shift: the role of renewable energy

Abstract

The goals of this paper are to examine whether the environmental Kuznets curve (EKC) holds and to investigate whether renewable energy consumption can decrease CO2 emissions in the USA using monthly data spanning the period 2000:M01-2018:M07. For these purposes, the paper employs a cointegration test with a regime shift and observes the long-run coefficients before and after the regime shift. The findings support the presence of the EKC. The findings also indicate that renewable energy consumption has negative effects on CO2 emissions, while these effects are greater when the share of renewable energy consumption in total energy consumption is higher in the USA. Theoretical and practical implications for these findings are discussed.