Do Green Technology Innovation and Trade Openness Drive Carbon Neutrality in Developing Countries? Examining the Mediating Role of Energy Consumption

ABSTRACT Climate change and global warming pose existential threats to ecosystems and livelihoods worldwide. The interconnected global economy, trade, and technological progress intensify the crisis, especially affecting vulnerable developing nations. Consequently, their commitments to reducing CO 2 emissions and reaching carbon neutrality are essential. This study examines how green technology innovation and trade openness influence CO 2 emissions, with energy consumption acting as a mediator, across 20 developing countries from 1994 to 2023. Using a two‐way fixed effects model, the study finds that green technology innovation significantly reduces CO 2 emissions, while trade openness, energy consumption, economic growth, population, and industrialization contribute to higher emissions. Additionally, the findings indicate energy consumption partially mediates the relationship between green technological innovation and CO 2 emissions, as well as between trade openness and CO 2 emissions. Causality analysis reveals a bidirectional causal relationship among green technological innovation, trade openness, economic growth, population size, industrialization, and CO 2 emissions. Based on these results, this study offers policy recommendations.