A step towards environmental mitigation: Do green technological innovation and institutional quality make a difference?

South Asian economies have had substantial development in recent decades, but policymakers are concerned about long-term output stability. Considering this, institutional quality and green technical innovation are recognized as effective mechanisms to mitigate CO2 emissions and promote sustainable growth as guided in core of COP 26. Consequently, the goal of this study is to investigate the long-run effect of institutional quality, green technology innovation, renewable energy, trade openness, population and economic growth on CO2 emissions from 1995 to 2020 in selected South Asian countries. Due to the possibility of residual cross-sectional reliance and heterogeneity, the study examined the relationship between the variables using second-generation panel techniques. The empirical findings show that green technological innovation and renewable energy reduce CO2 emissions by 0.084% and 0.054% respectively. Institutional quality, population growth, trade openness and economic growth degrade the environment 0.215%, 0.300%, 0.195% and 0.182% respectively. Dumitrescu and Hurlin (D-H) found a bidirectional causality association between green technological innovation, renewable energy consumption, trade openness, population size, economic growth, and CO2 emissions. This study offers policy recommendations for achieving a low-carbon economy, increasing the use of renewable energy, improving the institutions, making more investments in green technology, and ensuring environmental sustainability in South Asian economies.

Automated summary

South Asian economies have experienced significant development in recent decades, but concerns about long-term output stability remain. The study focuses on the impact of institutional quality, green technology innovation, renewable energy, trade openness, population, and economic growth on CO2 emissions in South Asian countries from 1995 to 2020. Using second-generation panel techniques, the empirical findings show that green technological innovation and renewable energy reduce CO2 emissions, while institutional quality, population growth, trade openness, and economic growth contribute to environmental degradation. The study also identifies a bidirectional causal relationship between green technological innovation, renewable energy consumption, trade openness, population size, economic growth, and CO2 emissions. Policy recommendations include transitioning to a low-carbon economy, increasing investments in renewable energy, improving institutions, and ensuring environmental sustainability.