Pathways to Carbon Neutrality: The Impact of Hydropower, Nuclear Energy, Economic Complexity, Financial Development, and Eco‐Innovation

ABSTRACT This study investigates how eco‐innovation, economic complexity, hydropower consumption, nuclear energy consumption, foreign direct investment (FDI) inflows, economic growth, and financial development affect carbon neutrality in Belt and Road Initiative (BRI) nations. The study illustrates numerous important conclusions by using panel data from 1990 to 2020 and the pooled mean group (PMG) approach: Economic complexity and financial growth show a long‐term tendency to increase carbon neutrality but have the opposite impact in the near term. Hydropower usage and eco‐innovation have consistently increased carbon neutrality in both the long and short term. Nuclear energy utilization decreases carbon neutrality in BRI nations. Carbon neutrality decreases over time with increased FDI inflows but rises in the short run. Carbon neutrality, hydropower use, eco‐innovation, economic complexity, and foreign direct investment all exhibit bidirectional connections. There is unidirectional causation between carbon neutrality, nuclear energy usage, and economic development. Based on these findings, this research suggests the use of ecologically friendly and energy‐efficient technology, as well as prioritizing investments in hydroelectric energy to reduce environmental damage. It also emphasizes the significance of putting in place proactive measures in BRI nations to increase carbon neutrality and promote sustainable development.