The impact of renewable energy, eco-innovation, and GDP growth on CO emissions: Pathways to the UK's net zero target.

In May 2019, the Climate Change Committee (CCC) recommended that the UK adopt a net-zero target, aiming to reduce its greenhouse gas emissions (GHG) by 100% from the 1990s baseline by 2050. The government accepted the recommendation, and the UK became the first major economy to establish a net-zero emissions law. To progress towards its climate objectives, the government took several initiatives, such as increasing its reliance on renewable energy sources and investing in climate mitigation technologies, which are commonly referred to as process eco-innovation. This study examines the impact of eco-innovation, process eco-innovation, renewable energy consumption, and economic growth on CO emissions in the UK using data from 1988 to 2020. We used the ARDL bound test with an error correction model (ECM) to examine the long-run and short-run cointegration between the variables of concern. We found that eco-innovation, process eco-innovation, and renewable energy consumption have significant roles in mitigating CO emissions, while economic growth contributes to environmental degradation in the UK. We also found that the effect of eco-innovation on CO emissions abatement is stronger than that of process eco-innovation in the short and long-run. Our robustness tests have confirmed the accuracy of those findings. In addition, the results from the Toda-Yamamoto causality revealed a one-way causality from process eco-innovation to CO, renewable energy to CO, and eco-innovation to CO emissions. Further, a bidirectional causality was found between GDP and CO emissions. The evidence presented in this paper provides great insight for shaping the energy policy in the UK and for establishing the climate budget in line with the country's net-zero target.