Carbon Emission Dynamics in India Due to Financial Development, Renewable Energy Utilization, Technological Innovation, Economic Growth, and Urbanization

Abstract

Concerns about climate change, emission reduction, and environmental sustainability have become crucial in accomplishing long-term development goals. The present study explored the dynamic effects of financial development, renewable energy utilization, technological innovation, economic growth, and urbanization on carbon dioxide (CO2) emissions in India. This investigation quantifies short- and long-run dynamics using time series data from 1990 to 2020 and an Autoregressive Distributed Lag (ARDL) model.  The outcomes from ARDL short- and long-run analysis revealed a positive and significant effect of financial development, economic growth, and urbanization on CO2 emissions in India. In contrast, both the short- and long-term coefficients for renewable energy utilization and technological innovation are negative and statistically significant, suggesting that expanding these variables will lead to lower CO2 emissions. The findings were validated by employing the Fully Modified Ordinary Least Squares (FMOLS), Dynamic Ordinary Least Squares (DOLS), and Canonical Cointegration Regression (CCR) methods. This research provides novel findings that add to the current literature and may be of special relevance to policymakers in the country because of the role that the financial system plays in environmental concerns.