Public spending for environmental protection in the UK: The environmental impact of environmental taxes, renewable energy, and nuclear energy

The UK has implemented significant measures to fulfil its commitment to reaching net-zero emissions by 2050. These measures include increasing public expenditure on environmental protection (EPE), investment in environmental research and development (R&D), implementing environmental tax reforms, accelerating the transition to renewable energy, and expanding the use of nuclear energy for electricity generation. This study aims to investigate the impact of these measures on environmental degradation in the UK using data from 1995 to 2021. We employed an auto-regressive distributed lag (ARDL) approach with an error correction model (ECM) to analyse long-term and short-term dynamics among the relevant variables. Our findings indicate that EPE, environmental taxes, and renewable energy consumption contribute to a significant reduction in CO2 emissions in the UK. Notably, environmental taxes have a greater impact on reducing CO2 emissions compared to EPE. Contrary to expectations, our findings reveal that environmental R&D expenditure increases environmental degradation, possibly due to a rebound effect. Additionally, our results suggest that while nuclear energy improves environmental quality in the short-term, its negative impact on the environment begins to manifest in the long-run. This study emphasises the importance of policy mixes and provides key implications for policymakers aligned with the UK's net-zero goals.