Towards Climate Resilience and Carbon Neutrality Goals: Investigating the Nexus Between Nonrenewable Energy Consumption, Green Finance, Eco‐Innovation, and Green Taxes

Abstract

The sustainable development goals (SDGs) 7, 9, and 13, as well as the commitments proposed at the Climate Change Conference (COP 27), aim for unprecedented collaboration between governments, businesses, financial institutions, and civil society to achieve carbon neutrality, climate resilience, and the COP goals. This study explores the interplay between nonrenewable energy, green finance, eco‐innovation, green taxes, and green growth of G20 economies from 2002 to 2021. The evidence of cross‐sectional dependence and heterogeneity directed us to use the Method of Moments Quantile Regression (MMQR) estimation and robustness check performed through the Feasible Generalized Least Squares (FGLS), Panel‐corrected Standard Error (PCSE), and Fully Modified Ordinary Least Squares (FM‐OLS) techniques. The MMQR quantiles ranging from 0.20 to 0.80 revealed that eco‐innovation, green taxes, and green finance positively impact environmentally adjusted multifactor productivity–green growth. In contrast, nonrenewable energy has a negative impact. Furthermore, the interaction between nonrenewable energy and green finance has a significant positive impact on green growth. The findings suggest that G20 economies must integrate economic growth with environmental protection goals, encourage the implementation of efficient climate technologies, switch to renewable energy sources, and ensure that inclusive finance mechanisms are in place. It has been suggested that the detrimental effects of nonrenewable energy sources on ecosystems accelerate environmental deterioration and climate change. By contrast, green finance, green taxation, and sustainable innovation practices act as catalysts to address these challenges. The study recommends some key policy guidelines for the execution of SDGs 7, 9, 13, and COP 27 commitments.