The nexus between consumption-based carbon emissions, trade, eco-innovation, and energy productivity: empirical evidence from N-11 economies.

Abstract

Unlike previous studies, this study attempts to fill the research gap in the area of consumption-based carbon emissions by introducing the role of energy productivity and eco-innovation along with international trade. To fill the mentioned research gap, the present study aims to evaluate the impact of eco-innovation and energy productivity on trade-adjusted consumption-based carbon emissions for the Next Eleven (N-11) economies using updated available data from 1995-2019. Further, on the methodological aspect, this study employed novel advanced panel data econometric techniques such as cross-sectional autoregressive distributed lags model (CS-ARDL), Westerlund cointegration test, and augmented mean group approach, which helps to tackle the problem of cross-section dependency and heterogeneity. The empirical outcomes confirm the long-run cointegrating relationship for consumption-based carbon emissions with exports, imports, gross domestic product, energy productivity, and eco-innovation. The results from CS-ARDL indicate that energy productivity, eco-innovation, and exports decrease carbon emissions by - 0.181%, - 0.0148%, and - 0.292%, respectively. However, economic growth and imports cause carbon emissions to increase by 1.201% and 0.225%, respectively. Moreover, the results also confirmed that any policy targeting energy productivity, exports, imports, gross domestic product, and eco-innovation should help to achieve equilibrium in approximately more than 1year. This study recommends that the role of energy productivity and environment-related innovation is crucial for achieving the carbon neutrality target of the Next Eleven economies.