Circular Economy Innovation-Renewable Energy-Green Growth Nexus under Carbon Neutrality Targets: New Insights from Europe

Climate change and global warming are the major problems irking the world community. Carbon emissions, released during economic activities, are considered the major drivers of environmental issues. Green growth is widely believed to be the panacea to environmental and economic problems because it helps separate carbon emissions and economic growth. Consequently, empirics have started to investigate the determinants of green growth. The circular economy practices help increase the lifespan of goods and services, which is vital in achieving environmental and economic goals. Nevertheless, the role of the circular economy in achieving green growth has never been estimated before. This gap in the current literature induces us to investigate the impact of circular economy innovation and renewable energy on green growth in Europe. The empirical analysis is conducted by employing 2SLS and GMM approaches. The findings observe a favorable influence of circular economy innovation and renewable energy on European green growth. In addition, logistic performance, ICT, government spending, financial development, and trade openness also promote green growth. These outcomes suggest policymakers should focus on the innovation of a circular economy and renewable energy to promote green growth.