Green innovation and carbon emissions: the role of carbon pricing and environmental policies in attaining sustainable development targets of carbon mitigation—evidence from Central-Eastern Europe

Adnan Khurshid (), Abdur Rauf (), Sadia Qayyum (), Adrian Cantemir Calin and WenQi Duan ()
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Adnan Khurshid: Zhejiang Normal University
Abdur Rauf: University of Science & Technology, Bannu
Sadia Qayyum: Hazara University
WenQi Duan: Zhejiang Normal University

Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, 2023, vol. 25, issue 8, No 56, 8777-8798

Abstract: Abstract Sustainable Development Goals (SDGs) are enforced by a set of instruments, among which environmental regulations, green innovation, and carbon taxes play a central part. This article aims to investigate the mitigation capacity of the above-mentioned elements using a sample of 15 European countries. This study takes CO2 and greenhouse gas emissions (GHG) into account to ensure the consistency and accuracy of the findings. Augmented Dickey–Fuller and CIPS unit root tests, Pesaran CD, Bias-corrected scaled LM are employed to check the cross-sectional dependence. The panel effect is tested using error correction-based modeling along with dynamic approaches, while the Granger causality technique employs country-related outcomes. The results show that innovation and environmental policies help in reducing emissions both in the long and the short run. In addition to this, carbon pricing mitigates emissions in the regions although its effect is more country-specific. We find evidence of both unidirectional and bidirectional causality among the variables. However, in a few cases, they are too a country-specific artifact. As a general conclusion, carbon pricing is an efficient short-run tool to achieve SDGs. At the same time, long-run sustainability relies on green innovation and environmental policy stringency in the region.

Keywords: Green innovation; Greenhouse gas emission; Environment; Carbon pricing; CO2 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s10668-022-02422-3

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