The effect of gross domestic product, urbanization, trade openness, financial development, and renewable energy on CO2 emission

Is digitalization essential for abating carbon emission growth in South Asia?

Output generation processes across South Asia are deemed unclean (highly emission-intensive) due to excessive reliance on fossil fuels. Thus, decarbonizing the growth processes of countries within this region has critical emphasis among policymakers. However, since the South Asian countries are not yet ready to undergo the renewable energy transition in full form, it is unlikely that their annual carbon discharge levels will subside anytime soon. Under such constraining circumstances, these countries need to limit the rate at which their respective carbon emission levels rise each year. Therefore, the impacts of digitalization on annual carbon emission growth rates in selected South Asian countries are assessed in this study. Overall, considering internet penetration rate as a proxy of digital technology adoption, the results confirm that policies aimed at digitalizing the concerned South Asian economies not only exert emission growth rate-reducing impacts via a direct channel, but also indirectly reduce emission growth rates by making natural resource-based industries more productive, expediting the energy sector greening processes, greening the financial sectors, making corruption controlling measures within institutions more effective, and limiting urbanization-induced environmental quality-worsening effects. Therefore, it is relevant for the South Asian governments to emphasize on digitalization while simultaneously ensuring that green digital technologies are adopted within the major macroeconomic sectors across this region.

Financial development and environmental quality: Does the financial environmental Kuznets Curve Prevail in Australia?

It is crucial to evaluate the link between financial development and environmental quality in order to meet the environmental sustainability goals. Therefore, this scholarly work seeks to validate the of an inverted U-shaped relationship between financial development and environmental quality in Australia, which modifies the conventional theory of the Environmental Kuznets Curve. For the purposes of empirical analysis, we utilized the Autoregressive Distributed Lag bound test over the period from 1980 to 2021 for empirical investigation. Our findings confirm the existence of a Financial Environmental Kuznets Curve (FEKC) in the long-run, while the short-run results do not support its establishment. This means that achieving a financial development level of 0.0458 could help attain the environmental wellbeing in Australia. Similarly, the estimation outcomes affirm that the conventional Environmental Kuznets Curve exists in the long-run but not in the short-run. Our results also indicate that energy usage negatively impacts environmental quality, while foreign direct investments support the pollution halo effect in the long-run but do not exhibit this effect in the short-run. The roles of urbanization and trade openness are positive in enhancing quality of environment in the short-run. However, the effect of the carbon tax on determining environmental quality in Australia is deemed insignificant. In conclusion, this study offers vital policy recommendations to help achieve the Australian government's commitment to climate change.

The adoption of renewable energy towards environmental sustainability: Evidence from Partial Least Square Structural Equation Modelling (PLS-SEM)

The effect of carbon emissions on the environment has made some of the Sustainable Development Goals difficult to achieve. Despite the efforts of international bodies, there is still a need to address the problem since the transition is not complete. Therefore, this study investigates the effect of globalization, economic growth, financial inclusion, renewable energy, and government institutions on carbon emissions from the period of 1998 to 2021. To be able to assess both the direct and indirect effects of the variables, the Partial Least Square Structural Equation Modelling is employed, where renewable energy serves as the mediator, and the Two-Stage Least Squares is employed as the robustness check. The findings of the study reveal that globalization promotes the use of renewable energy, but financial inclusion has a negative effect on renewable energy use. Renewable energy has a direct positive and significant effect on carbon emissions. Financial inclusion has an indirect negative and significant effect on carbon emissions. The results imply that more enlightenment on financial inclusion will help a smooth transition, and globalization should be embraced when all environmental regulations are enforced.

The effect of financial development on environmental quality: a developing country evidence

Financial development is vital to enhance the inclusive growth of a country in the modern world, and environmental quality, affected by financial development, is also a highly debated topic. Thus, this study attempts to investigate the role of financial development in determining environmental quality in Sri Lanka considering other variables namely economic growth, energy consumption, trade openness, and foreign direct investments. The key econometric tool used for the purpose is the Autoregressive Distributed Lag (ARDL) approach with the data from 1992 to 2021. As per the findings, financial development, economic growth, energy consumption, and foreign direct investments adversely impact environmental quality both in the long-run and short-run. Additionally, trade openness established a negative impact in the short-run only. Importantly, the Environmental Kuznets' Curve (EKC) hypothesis and Pollution Haven Hypothesis are established. Finally, all variables except trade openness confirmed a unidirectional causal relationship with environmental quality. This study recommends that all the modelled variables are vital to enrich the environmental quality in Sri Lanka.