Sustainable Development in Focus: CO2 Emissions and Capital Accumulation

In the modern era, CO2 emissions is a popular and significant study topic. Environmental sustainability is adversely affected by CO2 emissions, which have become the main cause of climate change. Using panel data analysis, this study investigated the connections between CO2 emissions and economic development, capital accumulation, and the use of renewable energy. Long-term connections between variables were examined using the Augmented Mean Group (AMG) and Common Correlated Effects Mean Group (CCEMG) estimators, taking into account heterogeneity and cross-sectional dependence. Additionally, the Dumitrescu–Hurlin Panel Granger Causality Test was used to assess dynamic interactions between variables. Although CH4 emissions increase CO2 emissions, the effects of economic growth and capital accumulation are not statistically significant, as determined using the AMG and CCEMG. Although the use of renewable energy was shown to have the potential to lower CO2 emissions, this impact was not statistically significant. The results of the dynamic panel demonstrate that CO2 emissions increase with capital accumulation. Although methane (CH4) emissions significantly impact CO2 emissions, economic growth, capital accumulation, and renewable energy use do not show statistically significant effects, highlighting the varying influences of these factors across nations. The findings of this study emphasize the need to integrate environmental regulations into capital investment strategies and adopt country-specific policies to effectively reduce CO2 emissions. They also underscore the need to customize green legislation to the specific conditions of each nation while simultaneously advocating for further expenditures in clean energy and the formulation of policies to supplant fossil fuels.