Do Public-Private Partnership Investment in Energy and Technological Transfers Improve Environmental Quality To Achieve Sustainable Environment Agenda: Evidence From Pakistan


 This paper tries to find the relationship among economic growth (GDP), import (IMP), export (EXP), public-private partnership investment (PPPG), and technological changes (TEC) on carbon-based CO2 emissions under the Environment Kuznets curve (EKC) premises during the period of 1980-2019 for Pakistan. This study employed various unit root tests that have been designed, such as Augmented Dickey and Fuller (ADF), ARDL co-integration tests, FMOLS, and DOLS estimation techniques. The results indicate that all the variables are co-integrated and have a short-run association among them. The results of DOLS and FOMLS indicate that CO2emissions significantly increase due to increases in economic growth. This study also verified the EKC hypothesis and the findings of the study support the EKC hypothesis for Pakistan. CO2 emissions are significantly decreased by increases in the share of technological innovation, and consumption-based carbon emissions are increased by the share of the trade and public-private investment in energy. The study results suggested that a reduction in the use of non-renewable energy through public-private investment and the use of renewable energy sources is related to energy efficiency policies. The consumption of non-renewable energy sources is high in Pakistan, as compared to renewable energy sources. Appropriate policy tools have been recommended to researchers and policymakers to minimize the harmful effect of global climate change and warming. Thus, environment quality can be enhanced through effective energy policies, sensible saving energy policies, optimized structural changes in the energy sector through effective government policies.


Introduction 27
Recently, global warming and climate change have represented significant challenges for the world's 28 nations. Environment quality reductions can be observed when economies attempt to achieve 29 rapid economic growth. Rapid economic growth is highly associated with community waste 30 problems, air pollution problems of various forms (such as smoke and noise), unexpected changes 31 in weather conditions, dangers to biodiversity, increased earth temperatures, forest logging, and 32 resource deficiency issues. This unfavourable environmental quality loss can be reduced through 33 sustainable economic growth. Improving environmental care and mitigating CO2 emissions are the 34 primary concerns of various countries. Thus, the construction of carbon-intensive technology and 35 infrastructure in the public transportation, electricity, sanitation sectors, and water supply are highly 36 1 associated with greenhouse gas (GHG) emissions. Simultaneously, it is projected that it is essential to 37 construct new or rehabilitate aging infrastructure according to global demand over the coming years. "The 38 Joint Research Center of the European Union (EU)" reported that 90 percent of the world's CO2 39 emissions are due to fossil fuel incineration (Oliver et al., 2012). Developed countries have been primarily 40 responsible for environmental degradation in recent decades; however, the ratio of CO2 emissions has 41 also increased in developing countries (IEA, 2014). Policymakers and researchers are currently focusing 42 on renewable energy sources as alternatives to non-renewable energy sources. The use of renewable 43 energy sources is estimated to increase from 10 percent of total energy sources in 2010 to 14 percent in 44 2035 globally (EIA, 2012). 45 Energy sustainability management is now a global concern, and national and local governments have 46 taken a significant interest in meeting the public's needs by addressing energy cost savings objectives, i.e., 47 reducing carbon and sustainable growth. The public budget limitations, both in terms of public 48 expenditure cuts and contractions of public funding, In terms of both the general public budget cuts and 49 the decline of public funds available, and the lack of appropriate and reliable management and 50 technological capabilities in public administration, the most significant challenges are among the different 51 hurdles that the public sector faces in carrying out energy conservation programs (Lee et al., 2003). 52 Alternative municipal procurement models, which gradually use the private sector to execute energy-53 efficient programs, would be necessary to address these challenges (Roshchanka and Evans, 2016). 54 Receiving the Public-Private Partnerships (PPPG) as a revolutionary method to establish energy-efficient 55 projects, many politicians have recently introduced PPPG as the most crucial factor of environmental 56 quality (Grimsey andLewis, 2002, Ahmad et al. 2020). 57 Moreover, many critical factors could strongly affect CO2 emissions. Thus, most essential variables are 58 viewed, i.e., technological innovation and public-private (partnerships)in energy can significantly reduce 59 CO2 emissions (Khan et al., 2020c;Shan et al., 2018). Therefore, the public-private collaboration helps 60 to clean the environment via technological changes and renewable energy, which provides the opportunity 61 for production in an environmentally friendly environment using a clean process; thus, it is argued that 62 such technologies can improve the global environment (Wen et al., 2020;and Georgatzi, Stamboulis, 63 & Vetsikas, 2020). A lower energy level can be consumed if the economy uses advanced technologies 64 (Sohag et al., 2015). Furthermore, energy consumption structure can be diverted from non-renewable 65 sources to renewable energy sources with efficient technologies. According to Andreoni and Levinson 66 (1998), the process of decontamination mostly depends on technical effects: more significant investment 67 in innovation contributes positively and mitigates pollution. 68 When countries raise their income, energy consumption, and environmental pollution rate decrease, the 69 innovation strategy with higher returns to scale facilitates improvements in energy effectiveness.

Technological innovation and its relationship with environmental degradation 208 209
A significant contribution of technological change (innovation) is found in energy-related growth; 210 this follows the endogenous growth theory, especially for the energy utilization and growth process. 211 Environmental pollution problems can be reduced by innovation externalities (Romer 1990), as 212 technological innovations significantly improve the quality of the environment. This supposition implies 213 that technological improvements follow the environmental correction measures based on increasing 214 returns (in the long-term), which mitigate environmental pollution with an increasing economic growth 215 rate. Many studies discuss the interaction between energy innovation and the correction of environmental 216 quality is significantly discussed within the EKC framework. The production capacity of the economy 217 initially raised the environmental degradation through the depletion of natural resources. But it is essential 218 to achieve sustainable economic growth and welfare through technological innovation to mitigate CO2 219 emissions. 220 221 Technological innovations based on environmental protection technologies are also essential to 222 mitigate CO2 emissions and to improve energy source efficiency ( Finally, the EKC scheme shows that when an economy moves towards the service sector, there are 271 demands for a clean environment. Based on these theoretical aspects, economic growth, energy use, 272 environmental pollution, and several additional variables are used in our analysis within the framework of 273 the EKC method. 274 A significant contribution of technological change (innovation) is found in energy-related growth; 275 this follows the endogenous growth theory, especially for the energy utilization and growth process.

276
Environmental pollution problems can be reduced by innovation externalities (Romer 1990), as 277 technological innovations significantly improve the quality of the environment. This supposition implies 278 that technological improvements follow the environmental correction measures based on increasing 279 returns (in the long-term), which mitigate environmental pollution with an increasing economic growth 280 rate. The interaction between energy innovation and the correction of environmental quality is 281 significantly discussed within the EKC framework in this study as well. 282 283

Data and methodology 284 285
Based on these theoretical aspects, GDP growth, environmental pollution, and several additional 286 variables are used in our analysis within the framework of the EKC method (in equation 1). 287 The econometric model based on the framework of EKC is given below, 288 289 where CO 2t shows the carbon emission (per capita) level (to measure the level of environmental pollution), 292 economic growth (per capita) is used as GDP and Z t shows the plausible determinants of CO2. 293 Where b 2 , b 3 , b 4 …..b 7 are the coefficients of GDP and other key variables of CO2. This study used the 294 different variables with different measuring units, so we have taken the log of all variables for simplicity 295 of analysis. 296 297 logCO 2 t =b 1 + b 2 logGDP t +b 3 (logGDP t ) 2 ++b 4 logTEC t + b 5 logIMP t + b 6 logEXP t + b 7 logPPPG t + e it 298 (2) 299 300 The GDP and quadratic form of GDP growth (per capita) are used in this analysis where equation 301 (2) included variously plausible to examine the influence of GDP growth, import and export, public- 308 The paper tries to analyze the time series data for Pakistan from 1980 through 2019. The CO2 309 emission in metric tons per capita (WDI, CD-ROM) is measured to use the environmental degradation. 310 The economic growth is measured as GDP per capita (in US$ with the base year of 2010) (WDI, CD-311 ROM). The demand for non-renewable sources is higher due to their high availability and low cost, and 312 converting from one energy type to another is also cheap. Rapid industrialization and urbanization require 313 more energy sources. Numerous developed and developing nations are highly dependent on fossil fuel 314 energy sources and significantly contribute to CO2 emissions.

316
Furthermore, IMP and EXP variables are measured in the percentage share of total GDP (WDI). 317 The The equation of bounds testing analysis is given as below, 326 ∆ ln CO 2 t = α 1 + α I lnGDP t−i +α 2 lnIMP t−1 +α 3 lnTEC t−i +α 4 lnEXP t−i + α 5 lnPPPG t−i + 327 ∑ 1 =1 The intercepts of the model are 1 , 1 1 and the error term is 1 and expected to be white noise. The 330 Akaike Information Criterion (AIC) is used to check the optimal lag length of the given model.

332
The results of bounds testing analysis found that the variables are co-integrated, and the outcome 333 confirms the association among the variables. Then the long-run and short-run association can be 334 measured through the autoregressive distributive lag (ARDL) approach. 335 336

Autoregressive distributed lag (ARDL) model 337 338
To find out the co-integration among the variables, the use of ARDL technique in any study, the results 339 of the model can not be spurious even with different orders of integration such as I(1) and I(0) and small 340 sample size (Pesaran et al. (2001). This study also used the ARDL technique where some variables are 341 endogenous and exogenous, which is used with different leg lengths, so variables become unbiased in 342 long-run analysis.

344
The bounds test estimation's results for ARDL (long-run) equation can 345 be written as below: 346 347 ln CO 2 t = α 1 + ∑ 1 =1 The equation mentioned above shows the 1 -5 co-efficents represent the long-run association between 351 the variables. The equation of the error correction model is given as below: 352 353 ln CO 2 t = α 1 + ∑ 1 =1 The equation mentioned above shows the 1 -5 co-efficient, illustrate the short-run association between 358 the variables. The error correction model determines the speed of adjustment, which shows how the 359 model can be reached at equilibrium position from short-run to the long-run equilibrium position. 360 361

FMOLS and DOLS tests 362 363
Environmental degradation significantly decreased with the use of technological advancement. 364 However, it increased with the help of public-private investment in energy and economic growth, based 365 on using dynamic ordinary least square (DOLS) and FMOLS methods for Pakistan from 1980 through 366 2018 to evaluate the EKC hypothesis. Phillips and Hansen (1990) have designed the FMOLS, and 367 Saikkonen (1992) proposed the method of DOLS. Long-term relationships can be found between these 368 selected independent variables and dependent variables. 369 370

Empirical results and discussions 371 372
The results of descriptive statistics show the leading statistics and features of the data analysis of the 373 model. Notes: The Akaike Information Criterion (AIC) optimal lag selection criteria are used in this study. 400 401 The *** and ** show the level of significant at 1 and 5 %, respectively. 402 After using the ARDL approach, we used the Wald test to find the value of F-statistics. The results also 403 indicate (in table 5) long-run relationships among the GDP growth, import and export, public-private 404 partnership investment, and technological changes on CO2 emissions. CO2emissions for Pakistan. The long-term relationships between these selected variables are significantly 407 associated with CO2emissions in the co-integration analysis. The results indicate that all the variables are 408 co-integrated, and there is a long-term association. The results also support the EKC hypothesis, and 409 public-private investment, GDP growth, import, and export significantly worsen environmental quality. 410  resource-intensive and export pollution-intensive goods. Stern et al. (1996)  the Error-Correction Model (ECM) and examined the income and public-private consumption in energy-442 driven emissions for Pakistan. The results indicate that all the variables are co-integrated, and there is also 443 a short-run association among the variables. The results also support the EKC hypothesis for Pakistan. 444 Environmental degradation significantly increased with the increase in PPPG, IMP, EXP, and GDP. The 445 speed of adjustment was found significant at a 1 % level of significance according to the value of ECT(-1), 446 where results indicate that it requires 59.1% modification to move (in the short run from the long run) 447 towards the equilibrium position of the analysis. 448 449 The robustness of the model we used structural constancy method, i.e., cumulative sum (CUSUM) 475 and cumulative sum of squares (CUSUMSQ), was established by Pesaran and Pesaran (1997). Figure 1  476 and 2 illustrates the graphical representation of these two tests. variable to support the global agenda of sustainable growth) significantly reduces CO2 emissions. The 500 results of co-integration also reveal a long-term association among these variables. The results of DOLS 501 and FOMLS indicate that CO2emissions significantly increase due to increases in economic growth. The 502 study also verified the EKC hypothesis. The study's findings support the EKC hypothesis for Pakistan: 503 CO2emissions are significantly decreased by increases in the share of technological innovation, and 504 consumption-based carbon emissions are increased by the share of the trade and public-private 505 investment in energy. Thus, the results also indicate that environmental degradation is significantly 506 growing, owing to the GDP growth and greater use of energy and importing of oil. Goods being 507 transferred from exporters to importers directly affect CO2emissions, a phenomenon called direct 508 measures/effects. The service sector contributes less to environmental degradation in developed countries, 509 whereas developing countries produce resource-intensive and export pollution-intensive goods. Stern et al.

510
(1996) have observed that free trade increases CO2emissions, especially in developing countries. So, we 511 have concluded that it is necessary to increase the use of renewable energy and the contribution of trade 512 services for a low carbon economy. 513

514
The study results suggested that a reduction in the use of non-renewable energy through public-515 private investment and the use of renewable energy sources is related to energy efficiency policies. The 516 consumption of non-renewable energy sources is high in Pakistan, as compared to renewable energy 517 sources. Thus, for this purpose, researchers and research institutions may be supported financially to 518 enhance the efficiency of energy usage and the development of energy conversion technologies and clean 519 energy technologies or renewable energy (i.e., solar, hydropower, geothermal, etc.). Production processes 520 may include renewable energy use that can increase economic growth and mitigate CO2 emissions levels.

521
Protection and encouragement of renewable energy investments can be made possible by controlling the 522 prices of non-renewable energy sources (especially oil, coal, and natural gas) and increasing taxes for 523 non-renewable sources.

525
Consequently, improvement of the energy sector can be made possible if energy regulation 526 policies are attached to the application of financial regulations. Environmental quality can enhance 527 financial development if public-private investment in energy is utilized efficiently for energy-efficient 528 firms. The use of renewable energy sources significantly decreases environmental degradation, and the 529 inverse association between renewable energy use and CO2 emissions has encouraged policymakers to 530 promote renewable energy sources. The technological improvements can be made in the energy sector, 531 and the budget can be allocated for green growth, and energy sources (renewable) can be optimized as 532 key government priorities. The adoption of green technologies and renewable energy in Pakistan can be 533 provided benefits from trade openness. 534 535 Economic growth increases due to free trade and fossil fuel energy use lead to CO2emissions. 536 CO2emissionsare decreased when an industrial sector converts to a service sector, and when technological 537 change occurs under free trade, CO2 emissions significantly decline. The service sector contributes less to 538 environmental degradation in developed countries, whereas developing countries produce resource-539 intensive and export pollution-intensive goods. Thus, environmental quality can be improved through 540 technological innovation and environment-friendly innovation in developing countries like Pakistan. 541 Appropriate policy tools have been recommended to researchers and policymakers to minimize the 542 harmful effect of global climate change and warming. These include renewable energy sources, 543 environmental taxation, and technological change in developing economies. Government policies strongly 544 influence the transitional economic growth phase; these may range from extensive to intensive economic 545 growth policies. Thus, environment quality can be enhanced through effective energy policies, sensible 546 saving energy policies, optimized structural changes in the energy sector through effective government 547 policies. Changes in industrial structure and clean environmental technologies are a prerequisite in 548 Pakistan and significantly reduce CO2 emissions. 549 550 Author No funding received from any source. 571 572 Competing Interests 573 The authors declare no competing of interest 574 575 Availability of data and materials 576 The datasets analysed during the current study are available in the World Bank Data Bank Database 577 repository (https://data.worldbank.org) 578 579 580 581