Toward sustainable consumption: Exploring the role of environmental innovation and international trade on consumption‐based carbon emissions in OECD countries

Abstract

Environmental degradation is a severe problem around the globe, which includes a range of worries such as weather extremes, biodiversity loss and heatwaves. The scientific community has widely recognized the urgent need to address these challenges and transition towards sustainable sustainability. One key aspect of sustainability is the concept of eco‐innovation, which involves the production processes that minimize ecological impact of productive activities. Businesses across the world are including eco innovation in their strategies, which have great impact on environmental performance. This study explores the linkage between eco innovation and environmental performance achieved by OECD nations over the period of 1990–2021. We investigate the impact that international trade, renewable energy consumption, and economic activity have on environmental performance. This study focuses on consumption‐based approach for measuring carbon emissions. Previous studies have focused on production‐based approach to measure carbon emissions. Using advanced econometric approaches, we find that eco innovation, exports and renewable energy consumption abate CO2 emissions, while imports and economic activities increase CO2 emissions.