The role of green finance and renewable energy in shaping zero-carbon transition: evidence from the E7 economies

In the face of escalating environmental and climate change concerns, the imperative to transition towards a zero-carbon economy has become a focal discussion for government, policy-makers and businesses. Accordingly, this research examines the influence of economic development, green finance, urbanization, technological innovation and renewable energy consumption on transitioning to a net-zero economy among seven emerging nations from 1990 to 2020. The study applied various econometric procedures to establish the dynamics among the variables. The novel Cross-Sectional Augmented autoregressive Distributed Lag (CS-ARDL) was applied to estimate the long-run interaction among the series. The empirical outcome confirmed the prevalence of the Environmental Kuznets Curve (EKC) among the E7 countries. In addition, this research finding revealed that technological innovation, renewable energy and green finance help in the transition to net-zero emissions. The conclusions of the study also highlighted urbanization positively influences carbon emissions. Moreover, results from this analysis proved that there exists a bidirectional connection between economic growth, technological innovation and carbon emission. Lastly, the paper found a unidirectional association between green finance, renewable energy sources, urbanization and carbon emission. This study thus contributes to the theoretical discussion on EKC and environmental sustainability. This study also offers several essential conclusions for decision-makers and other pertinent parties. Thus, the research suggests that by fostering a conducive environment for green financing projects, policy-makers can stimulate the deployment of innovative technologies and widespread renewable energy adoption solutions to promote the transition towards a zero-carbon environment.