In recent decades, environmental issues have assumed an increasingly prominent role in the global debate about the Earth’s future. Greenhouse gas emissions (GHG) are increasing despite joint efforts to implement international agreements. In this context, the energy sector is being recognized for its role in economic development and sectoral transformation, where it is the key to competitiveness among countries. This recognition has been incorporated into environmental analysis in order to address the over-exploitation of non-renewable energy sources, which is exacerbating air pollution.

In the late eighties, a critical view began to emerge among both developed and developing countries worried about the extreme use of natural resources and the lack of consideration of the support capacity of ecosystems. Global average temperature has already increased over the last three decades, and the global surface temperature is likely to rise an additional 1.1—6.4 °C (2.0-11.5 °F) in the 21st century (IPCC 2007a). The linear warming trend of the last 50 years is nearly twice that of the last 100 years. Global increases in concentrations of CO2 emissions are primarily due to the burning of fossil fuels, which accounts for 56.6% of total emissions (IPCC 2007b).

In this regard, reducing air pollution levels is considered a sign of environmental sustainability. Kuznets (1998) claims that economic growth represents the long-term increase in the capacity of a country to provide its population with increasingly diversified economic goods and that this increased capacity is based on the advancement of technology and on structural and ideological changes required by technical progress. This chapter re-examines various studies that have analyzed the effects of both energy innovation processes and economic growth on environmental correction processes. In other words, empirical studies demonstrate that the environmental process of degradation is conditioned by the energy innovation process and the economic cycle (Aghion et al. 2014). In this regard, some studies have analyzed the relationship between economic growth and environmental pollution (e.g., Grossmann and Krueger 1991, 1995; Panayotou 1993; Selden and Song 1994). Their primary findings have demonstrated the existence of an inverted U-shaped relationship between economic growth and environmental degradation.

This behavior assumes that at the early stages of economic development, environmental degradation increases with per capita income. The next step, after a society reaches a threshold or turning point, is a decline in environmental degradation, which occurs once economic growth causes income levels to rise. In other words, the empirical literature describes how societies undergo an environmental transition from the first stage of economic growth, at the early stages of industrialization (with ascending pollution rates), to a developed stage of economic growth where increases in income levels reduce pollution levels. This theory supports the statement about a development stage during which pollution increases rapidly as a result of the higher priority placed on material output, during which there is an interest in improving productivity rather than environmental quality. On the other hand, once a society enters its developed stage, pollution levels decrease. This relationship, which is defined as the Environmental Kuznets Curve (EKC), reveals that economic growth can be compatible with environmental improvements. According to Stern (2004), p. 1419, “the EKC proposes that indicators of environmental degradation first rise, and then fall with increasing income per capita”.

The EKC model also provides the opportunity to consider technical advances in the energy sector—during the developed stage of economic growth—as a necessary mechanism for reducing environmental pollution. The application of energy policy actions seems to be justified by the need both to correct environmental externalities and to reduce dependency on non-renewable resources. Therefore, this chapter attempts to illustrate, through the assessment of selected empirical studies, the positive effects that energy innovation policy actions exert over environmental correction.

Taking this into account, our aim is to present a summary of sustainable development and how this concept is linked with economic growth and environmental pollution.

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