The role of eco-innovation and globalization towards carbon neutrality in the USA

Abstract

After the Paris Climate Conference (Conference of the Paris COP: 21), many countries started progressing towards carbon neutrality. In doing so, the present study aims to assess the role of eco-innovation and globalization in mitigating CO2 emissions in the case of the USA. The study applied Quantile Autoregressive Distributed Lag (QARDL) approach to estimate the short-run and long-run relationship among the selected variables. According to the empirical results, gross domestic product (GDP) positively influences the level of CO2 emissions for the USA economy at all quantiles. However, GDP square is negatively associated with CO2 emissions in the USA; therefore, our study supports the existence of EKC for the USA. Further, eco-innovation is the mitigating factor of CO2 emissions in our empirical analysis. Our study proved that globalization is the stimulating factor of CO2 emissions in the US economy. The empirical estimates of the Granger causality test show the bidirectional causality from GDP, eco-innovations, and globalization to GDP for the USA economy. To mitigate CO2 emissions, the study provides useful insights for policymakers in the USA economy.

Keywords: Carbon neutrality; Eco-innovation; Globalization; QARDL; USA.