Neutralizing the surging emissions amidst natural resource dependence, eco-innovation, and green energy in G7 countries: Insights for global environmental sustainability

Abstract

The unrelenting surge in global warming in the current era suggests the inevitable need for governments across the globe to embark on policy measures that will help flatten the curve of the surging emissions. Consequently, the concept of carbon neutrality has become a vital policy approach for countries to achieve sustainable development. The present study extends the debates on carbon neutrality by examining the extent to which prominent factors such as natural resource dependence, eco-innovation, and green energy (biofuel and renewable energy) facilitate or hinder strides toward achieving carbon neutral environment in G7 economies. The study considers the additional roles of carbon tax, environmental policy stringency, and financial development in longitudinal data ranging from 1997 to 2019. The verification of the stated hypotheses hinges on a battery of estimators comprising cross-sectional ARDL, common correlated effects mean group, augmented mean group, and panel quantile regression. The empirical findings show that green energy, carbon tax, and environmental policy support the drive towards carbon neutrality by reducing the stock of CO₂ emissions. On the other hand, natural resource dependence and financial development hinder the carbon neutrality agenda by escalating the surge in CO₂ emissions. Robustness analyses are conducted from the angle of an additional outcome variable and estimation technique of which the results corroborate the empirical regularity of the main findings. Policy implications are derived from the empirical findings.

Keywords: Biofuels; Carbon neutrality; Carbon tax; Environmental policy; Environmental-related technology; Financial development; Renewable energy; Resource dependence.