Complementarities in the effect of economic globalization and decarbonization technologies on carbon neutrality. Evidence from Germany using Fourier-based approaches

Abstract

The global community has seen the existential threat of climate change caused by rising carbon dioxide emissions. But arising out of the 2015 United Nations Sustainable Development Goals is the call for a shift to clean energy technologies. The EU has set its targets to reach climate-neutrality by 2050, which requires that all Member States implement a coherent set of climate policies. The European Commission helps EU Member States design and implement reforms that support green transitions towards achieving the goals of the European Green Deal. To help the Europen Union with policy suggestions, this study investigates complementarities in the effect of economic globalization and decarbonization technologies on carbon neutrality in Germany using Fourier-based approaches between 1990 and 2019. The Fourier ARDL cointegration estimates indicate all variables are integrated. Additionally, the Fourier ARDL Long-run estimates indicate (i) both decarbonization technologies and economic globalization improve environmental quality; (ii) However, economic growth and primary energy consumption were found to cause havoc to environmental quality. To advance sustainability objectives, the German government could invest heavily in green technologies and innovation towards improving on their resilient systems and environmentally friendly infrastructure. Additionally, the European Union could implement regional trade opennes policies and regulatory measures towards inclusive green European economies that deliver on green and fair trade. Finally, the United Nations could implement projects that support partner economies to identify their unique transformational pathways through advanced analytical tools which could provide policy options and assess progress towards inclusive green economy.