Assessment into the nexus between load capacity factor, population, government policy in form of environmental tax: accessing evidence from Turkey

Abstract

Purpose Over the last decades, the need for sustainable energy production and consumption has been heavily discussed. However, there has been no consensus in the extant literature. Thus, to this end, this study aims to explore the long-run and causality connection among disaggregated energy consumption, environmental tax and economic growth in a carbon-function framework for Turkey. Design/methodology/approach This study uses annual frequency data for econometrics analysis. To this end, our analysis utilizes the autoregressive distributive lag (ARDL) technique for cointegration and long-run analysis, while the Granger causality was used for causality direction. Findings Economic growth drives Turkey’s Load Capacity Factor (LCF), indicating energy efficiency is linked to economic performance. Renewable energy boosts LCF, while nonrenewable energy hinders it. Population growth positively affects energy efficiency, but environmental taxes have minimal impact, suggesting policy reform is needed. These outcomes have far-reaching implications for macroeconomic policies and environmental sustainability in Turkish economy energy mix amidst its growth path. Research limitations/implications The findings suggest the need for policy reforms prioritizing renewable energy investments to enhance Turkey’s energy efficiency and sustainability. Additionally, the current environmental tax structure requires reevaluation to support sustainable energy practices better. These policy changes are crucial for balancing Turkey’s economic growth with environmental goals, ensuring a more sustainable energy future. Originality/value This study explores the role of government policy in form of environmental tax in environmental performance in Turkey.