The effects of trade, renewable energy, and financial development on consumption-based carbon emissions (comparative policy analysis for the G20 and European Union countries)

Recently, there has been a lot of focus on global trade and consumption-based carbon (CCO2) emissions. More research, however, has examined how financial development (FD) and international trade in renewable energy affect CO2 emissions. Furthermore, there are no distinct trends in the research about how globalization affects environmental quality. Our research analyzes and empirically investigates the relationship between CCO2 emissions and renewable energy, FD, and trade. A large panel of data from 41 G20 and European Union (EU) countries is assembled for empirical analysis from 1990 to 2019. The practical outcomes of panel quantile regression and feasible generalized least square (FGLS) approaches display that renewable energy and FD positively relate to CCO2 emissions; furthermore, trade to GDP hurts CCO2 emissions; market classification has been taken as a control variable which shows that the developed countries released more carbon than non-developed countries. These results suggest that the financial sector focuses more on supporting companies that use ecologically friendly techniques and pushing them to use other energy well-organized technologies in their production processes. As a result, CCO2 emissions will be reduced, preventing environmental damage at the non-renewable energy plant.