Can enhancing competitive industrial performance and adopting renewables stimulate progress toward carbon neutrality targets? Evidence from Asian developing countries

Abstract

The concept of carbon neutrality holds significant appeal within contemporary society, particularly in light of the pressing concern of climate change, which poses a grave threat to biodiversity. Given this context, it is imperative to investigate the role of industrial performance and industrialization in the pursuit of carbon neutrality, in conjunction with the prominence of green energy production. Thus, this research focuses on understanding the impact of industrial performance, industrialization, and renewable energy production on carbon footprint (CFP) within the framework of 13 Asian developing nations from 1993 to 2021. The findings from panel cross-sectionally augmented autoregressive distributed lag and augmented mean group approaches unfolded that both competitive industrial performance and industrialization drive CFP in Asian developing nations. Meanwhile, renewable energy makes a significant contribution to reducing CFP. In the context of CFP and associated parameters, it is observed that the coefficients derived from long-term analysis exhibit a greater magnitude in comparison to those obtained from short-term analysis. Further, bilateral and unilateral causalities were found between competitive industrial performance, industrialization, and CFP, respectively. Based on these findings, policymakers should develop strategies that prioritize the development of renewable energy infrastructure to mitigate the detrimental environmental effects of industrial performance.