Abstract
The study aims to address a significant research gap in measuring environmental sustainability by moving beyond traditional indicators such as carbon emissions and ecological footprint. Instead, it employs the load capacity factor (LCF) and its inverse (ILCF). Most existing research has overlooked nonlinear dynamics, threshold effects, and governance moderation when examining renewable energy, foreign direct investment (FDI), and trade openness in sustainability. Few studies have analyzed the relationship between renewable energy and these two elements within this context. The paper focuses on three key research questions based on the extended STIRPAT model and the Environmental Kuznets Curve (EKC): (i) What is the relationship between income growth, renewable energy, trade openness, FDI, and the long-run dynamics of ecological balance? (ii) Does the EKC hypothesis hold when sustainability is measured using LCF and ILCF? (iii) What are the institutional conditions, innovations, and institutional consequences that modify these impacts? Using Colombian data from 1990 to 2023, the study finds that renewable energy consistently enhances sustainability. Ecological balance is supported by FDI and resource rents, while it is negatively affected by deforestation and energy density. The analysis employs ARDL, Fourier-ARDL, NARDL, threshold regression, and causality tests. Results support the EKC hypothesis and reveal that governance acts as a threshold variable, either promoting or inhibiting the effects of openness and investment on sustainability. The integration of nonlinear dynamical analysis, governance prerequisites, and robustness tests provides groundbreaking empirical data for Colombia and offers operational suggestions for other resource-dependent economies.