Do international collaborations in environmental-related technology development in the US pay off in combating carbon dioxide emissions? Role of domestic environmental innovation, renewable energy consumption, and trade openness

Many economies are seeking new ways to improve environmental quality through international collaboration in environmental-related technology development (ICERTD). Cost reduction, green market penetration, and green technology development are central to global partnerships for sustainable development, even though no empirical study explains the ICERTD-carbon dioxide (CO2) emissions nexus. The paper fills this knowledge gap in the environmental economics literature by examining the relationship between ICERTD and CO2 emissions in the U.S. from 1990Q1 to 2018Q4 using domestic environmental innovation, trade openness, renewable energy consumption, and gross domestic product per capita as control variables. Fully modified ordinary least squares, dynamic ordinary least squares, and correlated component regression methods were employed for testing the long-run nexus among the variables. The present study revealed that (i) a long-run cointegration existed among ICERTD, domestic environmental innovation, trade openness, renewable energy consumption, gross domestic product per capita, and CO2 emissions; (ii) ICERTD, domestic environmental innovation, and renewable energy consumption benefited the U.S. in lowering CO2 emissions in the long run; and (iii) trade openness and gross domestic product per capita were positively associated with CO2 emissions. This study recommends important policy recommendations for increasing ICERTD for decarbonization.