The role of digitalization, renewable energy supply and economic growth in environmental quality: evidence from OECD countries on the axis of sustainable development

Investments in renewable energy sources are considered having an important place in achieving sustainable development goals. The impact of renewable energy on environmental quality is at the center of researchers’ attention. In addition, the development of Industry 4.0 and the philosophy of Society 5.0 have brought a different dimension to digitalization and technological advances. With the impact of these developments that trigger regional and global competition, the connection of digitalization and economic growth, which is a prominent factor in this process, with environmental quality, has become a matter of curiosity. This research aims to reveal the role of digitalization, renewable energy supply and economic growth in environmental quality. In this study, 38 OECD countries and the 2005-2020 period is taken as a basis. Dumitrescu & Hurlin (2012) panel causality analysis has been used as a method in the study and a heterogeneous VAR model has been estimated. The findings from the panel causality analysis reveal that there is a causal relationship between digitalization, renewable energy supply and economic growth variables and environmental quality. Panel VAR model results also show that digitalization is significant in 4 countries, renewable energy supply is significant in 10 countries and growth is significant in 11 countries in explaining environmental quality. The findings of this study reveal that policymakers must prioritize digitalization and renewable energy in the process of protecting and improving environmental quality.