Environmental taxes, eco-innovation, and environmental sustainability in EU member countries

Environmental taxes and renewable energy consumption are becoming central policy instruments in countries especially in European Union (EU) countries to enhance environmental sustainability; however, no attention has been given to eco-innovations in the nexus between environmental taxes and carbon dioxide emission. This study investigates the effect of environmental taxes, innovations, and renewable energy consumption on CO2 emissions in 26 EU countries from 2000 to 2020. Panel quantile regression was employed for analysis where the results show that environmental taxes have both positive and negative influence on CO2 emissions across quantiles in different models, whereas renewable energy consumption considerably reduces carbon emissions. Economic growth causes an increase in CO2 emissions; however, the financial progress greatly reduces CO2 emissions. Eco-innovations and its square term have a negative influence on carbon emissions which shows that eco-innovations significantly reduce carbon dioxide emission. The findings have significant implications for public policy in the sample countries, notably in terms of promoting renewable energy sources and transitioning to green growth through eco-innovations in order to achieve environmental sustainability.

Automated summary

Environmental taxes, innovations, and renewable energy consumption have significant effects on CO2 emissions in EU countries. Environmental taxes have both positive and negative impacts on CO2 emissions across different quantiles. Renewable energy consumption significantly reduces carbon emissions. Eco-innovations have a negative influence on carbon emissions, indicating that they can significantly reduce CO2 emissions.