Achieving Carbon Neutrality Through Renewable Energy Transition Amidst Economic Policy Uncertainty in the Arctic Region

Abstract

In the rapidly unpredictable economic and environmental era, the Arctic region stands at a pivotal crossroads. Globally, the rise in carbon emission (CEM) has continued to escalate in recent decades. Still, extant analyses have not sufficiently investigated the variables contributing to CEM dissipation, particularly in the Arctic Council. Therefore, this paper closes the knowledge gap by assessing the influence of environmental technology (EVT), economic policy uncertainty (EPU), renewable energy transition, and urban transition on CEM. Moreover, the study investigated the moderation effect of environmental governance on the interconnection between EPU and CEMs, incorporating historical data from 30 years ago (1990–2020). The research applied three econometric techniques, moments quantile regression, fully modified ordinary least square (FMOLS), and Driscoll and Kray standard errors (DSK), to ascertain the interaction among the research indicators. The study’s outcome established that (1) the switch to renewable or cleaner power supply, EVT, and governance improves ecological health. (2) Environmental policy uncertainty and urban transition disrupt ecological stability in the Arctic region. (3) Environmental government moderates the effect of EPU and CEM. The study provides policy-makers, stakeholders, and politicians with essential policy recommendations to help establish resilient and environmental quality in the Arctic region and beyond.