On the goals of sustainable production and the conditions of environmental sustainability: Does cyclical innovation in green and sustainable technologies determine carbon dioxide emissions in G-7 economies

Many economies have recognized environmental pollution as a pressing concern threatening global sustainable production and consumption. Experts agree that extensive use of carbon-intensive fuels in consumption and production has amplified the harmful effects of carbon dioxide emissions. Several governments have responded by implementing strict laws and promoting innovation in green and sustainable technologies across private and public institutions, e.g., universities. Even though extant literature supports research and development as a procyclical phenomenon, the non-linear effect of shifts in R&D and innovation in green and sustainable technologies on carbon dioxide emissions in the G7 countries remains unexplored. The paper examines the asymmetrical and cyclical relationship between innovation in green and sustainable technologies and carbon dioxide emissions using panel data of G7 nations from 1990Q1–2018Q4. The Westerlund cointegration tests confirmed the cointegration relationship among the selected variables. Cross-Sectionally Augmented Autoregressive Distributed Lag estimator demonstrated that adverse shocks in innovation in green and sustainable technologies contribute to carbon dioxide emissions in recessions. Second, the results supported that positive shocks in innovation in green and sustainable technologies mitigate carbon dioxide emissions during economic boom periods. Third, the current estimates showed that gross domestic product increases carbon dioxide emissions, but renewable energy consumption reduces carbon dioxide emissions. Beyond that, the robustness check supported the consistency and accuracy of the current results. Overall, the present findings suggested that the relationship between innovation in green and sustainable technologies and carbon dioxide emissions is counter-cyclical.