Achieving carbon neutrality target in the emerging economies: Role of renewable energy and green technology

Abstract

Recently, various initiatives are being taken to attain environmental sustainability by reducing the carbon footprint of major emerging economies. The carbon-neutrality target has become a vital goal in this direction. This study examines the importance of green technology and renewable-energy in achieving the target of carbon-neutrality for 18 emerging countries from 1990 to 2018. We have used Cross-sectional auto-regressive distributed lag (CS-ARDL) estimator to investigate the short-run and long-run association among the variables. Further, Augmented Mean Group (AMG) and Common correlated effects mean group (CCEMG) estimators have been used to get robust results. The findings confirm that green technology, renewable energy consumption, urbanization, and corruption-control significantly mitigate carbon emission in both the short-run and the long-run. In contrast, Gross-Domestic Product (GDP), trade, non-renewable energy, energy-import, and energy-intensity are found to increase carbon emission. Further, it is found that renewable energy reduces carbon emission monotonically whereas green technology exhibits a U-shaped effect on carbon emission. Additionally, green technology effectively moderates the relationship between renewable-energy and carbon emission reduction in the long-run. The results of the Dumitrescu-Hurlin causality test indicate a bidirectional causality between green technology innovation and carbon emission while a unidirectional causality is found to exist from renewable energy to carbon emission. Based on these empirical findings, it is suggested that policymakers should strengthen eco-friendly policies, promote green technology and renewable energy, and invest in sustainable sources to achieve the carbon neutrality target.