Impact of Green Energy and Technological Innovation on Climate Changes in South Asia

Abstract

One of the most significant threats to sustainable development is climate change and South Asia is the most exposed because it relies on fossil fuels, high economic growth, urbanization, and population increase. This paper explores how green energy and technological innovation affects greenhouse gas (GHG) emissions of 5 economies in South Asia namely India, Pakistan, Bangladesh, Nepal and Sri Lanka between 1990 and 2023. The research uses a balanced panel data and adopts the Pooled Mean Group (PMG) estimator in Autoregressive Distributed Lag (ARDL) to employ both short and long-term dynamic and equilibrium connections between the subject variables. The results show that levels of renewable energy use and technological development lead to significant lower GHG emissions long-term. Green energy helps to reduce emissions by decreasing the use of fossil fuels, whereas technological innovation helps to enhance efficiency and to promote the use of more environment-friendly ways of production. On the other hand, GDP growth, openness to trade, urbanization, and population growth put an upward pressure on emissions, especially in the short run, irrespective of the developmental and structural issues of the area. The interdependence of the three variables indicates a mutual relationship between them as evidenced by the analysis of the relationship between renewable energy and innovation and emissions through the application of the Granger causality. The findings partly confirm the hypothesis of the Environmental Kuznets Curve (EKC), which states that South Asian nations are still trapped in the pollution intensive phase of development. Also, the results correspond to the Pollution Haven Hypothesis (PHH) because an increase in industrialization caused by trade liberalization leads to environmental underdevelopment. Nevertheless, in this article we point to how implementation of renewable energy and breakthroughs in technology could reverse these trends.