Patents on environmental technologies and environmental degradation in a Scandinavian Country: Evidence from novel Fourier-based estimators

Environmental deterioration is a substantial hazard to sustainable development. To add new dimensions to the discussion. This study aims to consider the impact of patents on environmental technology and environmental degradation in Iceland, along with other indicators, such as economic growth, primary energy consumption (PEC) and trade openness. This effect has not been comprehensively examined in the case of Iceland's economy. To this end, the study adopted novel econometric Fourier-based estimators. The Fourier-augmented Dickey-Fuller (F-ADF) unit root tests, Fourier-autoregressive distributive lag (F-ARDL) cointegration test, F-ARDL for long run estimation, and the Fourier-Toda and Yamamoto (Fourier TY) causality test to determine the impact of explanatory and control indicators on production-based CO2 emissions for the period 1995Q1 to 2019Q4. The findings revealed the impact of environmental technology and trade openness is negative and mitigates production-based CO2 emissions and increases environmental sustainability in Iceland. In contrast, economic growth and PEC were found to have harmful and positive influences on production-based CO2 emissions and increases environmental deterioration in the region. In addition, the Fourier TY causality test suggests unidirectional causality between these indicators in Iceland and the outcome further confirms that environmental technology and trade openness are vital for decreasing production-based CO2 emissions in Iceland. Thus, the study findings benefit policymakers in adopting green innovation activities that increase sustainable energy resources and minimize the detrimental effects of a boost in economic activities in Iceland for sustainable development.

Automated summary

This study examines the impact of patents on environmental technology and degradation in Iceland, as well as other indicators such as economic growth, primary energy consumption, and trade openness. The findings show that environmental technology and trade openness have a positive effect on reducing CO2 emissions, while economic growth and primary energy consumption have a negative effect.