Exploring the Trade-Off Between Environmental Quality and Economic Welfare: Analyzing the EPC and EKC Hypotheses in the UK with a Focus on Democratization and Fossil Fuel Use

Carbon neutrality achievement, mitigating and reverting environmental degradations, and increasing renewable energy projections have been among the most mentioned and received the attention of the government's agendas. Nearly all documents and policy actions have been designed and highlighted under environmental-related issues. However, the considered policy actions have been considered tough decisions involving a trade-off between environmental quality and economic welfare. The Environmental Phillips Curve has been recently introduced under the insight into the trade-off, and the EPC implies that environmental degradations can be blessed at the cost of high unemployment. The study strives to scrutinize the EPC and EKC hypotheses by considering the effect of Democratization, quality of government, and fossil use on CO ₂ emissions in the UK. Within this context, the ARDL approach, the FMOLS, and DOLS estimators are performed on data covering the period between 1990 and 2021. The result of the study discloses that the EPC hypothesis is not verified, whereas the EKC hypothesis holds for the UK. Besides, quality of government and Democratization play a pivotal role in mitigating CO ₂ emissions, while fossil fuels impair the air quality of the UK. The evidence is that policymakers in improved democratic institutions can implement a better performance of providing policy directions for mitigating environmental degradation, and the country with achieved compositions and techniques effects can implement pro-environmental policies without the cost of economic welfare.