Interplay between economic progress, carbon emissions and energy prices on green energy adoption: Evidence from USA and Germany in context of sustainability

In contemporary times, where most academic research mainly focuses on the factors of economic and environmental sustainability and emissions reduction. Yet, very little attention has been paid to the identification of the factors of renewable energy, which requires appropriate policy-level attention. Consequently, this research investigated two developed economies, i.e., Germany and the USA, from 1991 to 2021 where, the objective of the study includes using novel and robust empirical methods to test the causal relationship between renewable energy and CO2 emissions, economic growth, technological innovations and oil prices. Using the normality and unit root estimators, this study observed that non-normal data distribution, yet all the variables are stationary. Using time-series and panel cointegration tests, the results validate the cointegration between economic growth, oil prices, carbon emission, technological innovation, and renewable energy adoption in the United States whereas Germany does not show cointegration between the variables. This study employ ‘s the Morlet-Wavelet approaches and key findings show that all these variables have a significant role in improving renewable energy adoption in both the region. Furthermore, results show a unidirectional and bidirectional causal association between the variables via the panel-stacked Granger causality test. This study recommends effective policy ramifications concerning improved investment in technological innovation, improved low-carbon production, and diverting economic growth to renewable energy transition. Use of improved new time-series method of wavelet coherence show the key contribution in this paper with new evidence of time frequency analysis on how external variables affect renewable energy consumption in developed countries of US and Germany. The objective includes understanding the effects of CO2 emissions, economic growth, technological innovations and oil prices on renewable energy which would give evidence to policy makers and environmentalists on how developed countries should improve clean energy adoption.