The impact of financial innovation, green energy, and economic growth on transport-based CO2 emissions in India: insights from QARDL approach

Concerns about a sustainable environment are increasing and have attained significant attention among policy experts worldwide. Therefore, the current research investigated to what extent financial innovations, green energy, and economic growth impacted Indian transport-based carbon (TCO2) emissions from 1990 to 2018. This research applied quantile autoregressive distributed lag (QARDL) model and the Wald test for parameter consistency. The QARDL approach proves valuable as it illustrates the causal patterns across different quantiles of financial innovations, green energy, economic growth, and environmental degradation. It offers a more comprehensive understanding of the overall relationships among these variables, which conventional methods such as ARDL and OLS often overlook. The outcomes reveal that financial innovation and green energy negatively affect TCO2 emissions, suggesting that transportation sector emissions will likely decline because of a rise in green energy and financial innovation. In contrast, GDP positively affects TCO2 emissions which deteriorate the environment. Furthermore, the findings of GDP2 found significant and negative effects on TCO2 for all quantiles, affirming the inverse U-shaped curve for the Indian economy. Overall, the study suggests that Indian governments should promote the development of green financial innovation and focus their priorities on sustainable energy to attain carbon neutrality and sustainable development goals.