Towards net zero emissions by 2050: the role of renewable energy, technological innovations, and forests in New Zealand

Abstract

New Zealand has set a target of net zero emissions by 2050, and this study looks into the role that economic growth, renewable energy use, technological innovation, and forests could play in getting them there. The Dynamic Ordinary Least Squares (DOLS) technique was used to analyze time series data from 1990 to 2021. According to the results of the DOLS estimation, a one-percentage-point increase in economic growth is associated with a 0.24% increase in CO2 emissions. Furthermore, increasing the use of renewable energy by 1% is related with a reduction in CO2 emissions of 0.81 percent over the long run, as indicated by the coefficient of renewable energy use being negative and statistically significant. The calculated long-run coefficient of technical innovation is negative and statistically significant, suggesting that a 1% increase in technological innovation results in a 0.02% reduction in CO2 emissions. The long-run coefficient of forest area is notably negative and significant, which means that increasing forest area by 1% reduces CO2 emissions by 4.78%. The empirical results show that as New Zealand's economy grows, so do its CO2 emissions, but that the country may get closer to its goal of carbon neutrality through the growing use of renewable energy, technological innovation, and sustainable forest management. Alternative estimators, such as fully modified least squares (FMOLS) and canonical cointegrating regression (CCR), do not significantly affect the estimated results. In order for New Zealand to reach its goal of net zero emissions by 2050, this article offers policy ideas centered on a low-carbon economy, the promotion of the use of renewable energy sources, the financing of technical progress, and sustainable forest management.