Energy, Growth, and Emissions Under Sustainability Transitions: Wavelet Coherence and Quantile‐on‐Quantile Evidence From OECD Economies

ABSTRACT

Climate change, increasing carbon emissions, and rising global energy demand have intensified the need for environmental sustainability. This study examines the dynamic interlinkages among energy intensity, economic growth, environmental innovation, and production‐based carbon emissions in OECD countries from a sustainability perspective using a novel combination of wavelet coherence and quantile‐on‐quantile regression techniques. The empirical findings reveal a strong and persistent positive association between energy intensity and CO ₂ emissions across most quantiles, underscoring the emissions‐enhancing role of energy inefficiency. In contrast, higher economic growth is found to reduce emissions at upper quantiles, indicating evidence of long‐run decoupling in advanced emission regimes, consistent with pathways toward sustainable economic growth. The relationship between energy intensity and environmental R&D expenditure is generally weak and unstable, suggesting that the effects of innovation investments are indirect and materialize over longer horizons. Wavelet coherence analysis further highlights pronounced time‐varying and frequency‐dependent co‐movements among the variables, with short‐run in‐phase dynamics and long‐run divergence between growth and emissions. The apparent differences between the wavelet‐based results and the distribution‐dependent quantile estimates arise from methodological scope rather than contradiction, as wavelet coherence captures short‐run time–frequency co‐movements while quantile methods reveal heterogeneous structural effects. Additionally, the Toda–Yamamoto framework is employed to examine directional predictive causality among the variables. The findings underscore the importance of energy efficiency improvements, adaptive policy design, and sustained innovation support for achieving environmentally sustainable low‐carbon growth in OECD economies.