Carbon neutrality target in Turkey: Measuring the impact of technological innovation and structural change

Abstract

Climate change and environmental degradation have become the most complex and contentious global concerns in recent decades, despite growing worldwide accords demanding that these serious issues must be addressed urgently. Thus, we assessed the effect of technological innovation, economic growth, structural change, and nonrenewable energy use on CO2 emissions in Turkey using a yearly dataset spanning between 1980 and 2019. The current paper utilized the ARDL bounds test, dynamic ARDL, and Breitung Candelon causality tests to assess these interrelationships. The outcomes of both the ARDL bounds and Bayer and Hanck cointegration tests affirmed evidence of cointegration among the variables. Furthermore, the outcomes of the dynamic ARDL disclosed that economic growth and nonrenewable energy use contribute to the degradation of the environment, while technological innovation stimulates the quality of the environment. Using the approach suggested by Itkonen (2012), the current paper does not confirm the EKC hypothesis. Lastly, the outcomes of the Breitung Candelon causality revealed a feedback causality association between nonrenewable and CO2 emissions, while a unidirectional causality exists from technological innovation, economic growth, and structural change to CO2 emissions. Based on the above findings, we propose that the government of Turkey should restructure its energy sector to address both carbon emissions and production losses by boosting the use of eco-friendly and efficient technologies in the process of production, while also shifting to a more services-based economy.