Nexus between Cyclical Innovation in Green Technologies and CO2 Emissions in Nordic Countries: Consent toward Environmental Sustainability

Several economies have acknowledged that environmental degradation poses a serious danger to worldwide sustainable production and consumption. Policy makers concur that the increased use and production of carbon-intensive technologies has intensified the detrimental consequences of carbon dioxide emissions. In response, a number of nations have reacted by enacting stringent regulations and encouraging green technology innovations across corporate and governmental organizations. Evidence that already exists suggests that research and development is a cyclical process; nevertheless, the non-linear influence of shocks in research and development and innovation in green technologies on CO2 emissions in the Nordic nations has not been well investigated. Using panel data from 1995 to 2019, this research explores the asymmetric link between innovation in green technologies and CO2 emissions. The cointegration link between the chosen variables was validated using the Westerlund cointegration test and the Johansen–Fisher panel cointegration test. The findings of both tests confirm the presence of cointegration association between dependent and independent variables. The outcomes of CS-ARDL revealed that negative shocks in creating green technologies contribute to carbon dioxide emissions during recessions. Second, the findings supported the notion that innovation in green technology may reduce carbon dioxide emissions during times of economic expansion. Thirdly, the GDP increases the CO2 emissions, but the usage of renewable energy decreases CO2 emissions. In addition, the robustness analysis validated the consistency and precision of the existing findings. In summary, the findings suggest that the link between advances in environmentally friendly technologies and levels of carbon dioxide emissions were inversely proportional.