The role of energy intensity, green energy transition, and environmental policy stringency on environmental sustainability in G7 countries

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Abstract The increase in energy intensity and energy depletion may lead to faster depletion of natural resources and increased environmental impacts. The green energy transition can improve environmental quality by reducing the pressure on natural resources and the carbon footprint. At this point, public environmental regulations are significant for environmental sustainability. On the one hand, the environmental policy stringency imposes high environmental taxes on polluting activities and, on the other hand, provides R&D support to clean technologies. This study examines the impact of energy intensity, energy depletion, green energy transition, and environmental policy stringency on load capacity factor in G7 countries from 1990–2020 using common correlated effects mean group and augmented mean group panel long run estimators. The study's robust results show that i) energy intensity has a negative impact on environmental sustainability in Germany, Italy, and the USA, ii) energy depletion has a negative impact on environmental sustainability in Canada and France, and iii) green energy transition has a positive impact on environmental sustainability in Japan. G7 countries must reverse the adverse effects of energy intensity and energy depletion by accelerating the transition to green energy. These countries with significant fiscal capacity should use environmental policy instruments that include environmental taxes. Graphical abstract