An ARDL approach to investigating the relationship between FDI, renewable energy, economic growth, trade openness, and CO2 emissions in Australia

• Relationship between FDI, RE, EG, TO, and CO 2 in Australia. • The data is collected from 1990 to 2023. • The paper employs the ARDL methodology. The manuscript investigates the dynamic interrelation between foreign direct investment (FDI), renewable energy (RE) consumption, trade openness (TO), economic growth (EG), and carbon dioxide (CO₂) emissions in Australia using the Autoregressive Distributed Lag (ARDL) bounds testing approach over the period 1990–2023. The empirical findings reveal that EG and TO have a positive long-term interrelation with CO₂ emissions, whereas RE consumption exerts an adverse effect, implying its role in reducing environmental degradation (ED). Interestingly, FDI is positively associated with CO₂ emissions, suggesting that FDI inflows might have environmentally detrimental effects, in line with the pollution haven hypothesis. The results underscore the demand for environmentally conscious investment policies and a more robust transition towards RE sources. Policy implications include fostering green investments, strengthening trade regulations, and integrating environmental considerations in economic planning.