Achieving net-zero carbon emission targets in OECD countries: The role of the energy transition, institutional quality, and green technological innovation

Abstract

This study looks at the effects of energy transition, green innovation, and institutional quality on carbon dioxide (CO₂) emissions in 35 Organization for Economic Cooperation and Development (OECD) countries from 1990 to 2020. We analyse the driving factors of CO₂ emissions by comparing two recently developed indices for the energy transition: the green quality of the energy mix (GREENQ) and the energy transition index (ETI). The augmented Anderson-Hsiao (AAH) estimator for dynamic short-time-period panels is an innovative technique for estimating panel data used in this study. Results reveal that the energy transition directly controls CO₂ emissions for the GREENQ index, but institutional quality does not moderate the relationship between the GREENQ index and CO₂ emissions. However, ETI augments the CO₂ emissions process, and institutional quality moderates the relationship between ETI and CO₂ emissions, helping to reduce carbon emissions. Institutional quality also plays a direct role in CO₂ emissions mitigation. Additionally, green technological innovation is another driving factor that minimises pollution levels through CO₂ emissions mitigation. The study findings suggest the need for a policy framework that coordinates climate change adaptation and mitigation measures to achieve the UN’s Sustainable Development Goals.