What drives environmental sustainability? The role of renewable energy, green innovation, and political stability in OECD economies

One possible way to achieve environmental sustainability is by addressing the issue of rising CO₂ emissions, which significantly cause climate change by intensifying the greenhouse gas effect. The Organization for Economic Cooperation and Development (OECD), which substantially contributes to global CO₂ emissions, necessitates a paradigm shift towards using clean energy sources and promoting green innovations to ensure environmental sustainability. Thus, this study aims to inspect the role of renewable energy use, green technology innovation, political stability, and fiscal decentralization in attaining environmental sustainability by limiting CO₂ emissions for seven OECD economies from 2000 to 2019. This study has employed the ‘Cross-Sectional Augmented Autoregressive Distributed Lag and Augmented Mean Group Estimator’ for robust empirical analysis. The results indicate that renewable energy use, political stability, and fiscal decentralization can mitigate CO₂ emissions and ensure environmental sustainability in OECD economies. In contrast, green technology innovation exhibits an insignificant effect on CO₂ emissions. Furthermore, the moderation effects of fiscal decentralization and political stability exhibit a negative relationship with CO₂ emissions. Notably, this study advises OECD nations to encourage regional cooperation to ensure political stability and devolution of fiscal powers to promote green innovation and renewable energy use to achieve sustainable goals.