Climate Change Mitigation in the Globalized European Market: Integrated Role of Energy Taxes, Energy Innovations, and Technology for Sustainable Development

ABSTRACT The profound effects of climate change on the environment and economy have driven significant global mitigation efforts. Among these, the European Union has been at the forefront, advocating for climate change protection. This study examines the roles of energy taxes, energy innovations, and innovative technologies in mitigating climate change across 25 EU countries between 1995 and 2019. By employing a cointegration approach with the Method of Moment Quantile Regression and Fixed Effect OLS with Driscoll and Kraay standard errors, the analysis integrates economic development, population, and globalization as control variables. The findings confirm the double dividend hypothesis, suggesting environmental taxes yield both ecological and economic benefits. The results also confirm the positive relationship between energy innovation and mitigation. Technological innovation indicates strong positive correlations with mitigation efforts. Moreover, globalization emerges as a critical factor, with its linkage to increased mobility of environmentally friendly production and consumption, but the magnitude of this association decreases, especially at higher quantiles. Economic growth and population impact are also found to be significant; however, population impact becomes weaker for higher quantiles. Robustness check validates the findings. Furthermore, causality analyses reveal bidirectional causality among energy‐related taxes, technological innovation, GDP, and mitigation. Based on the findings, the study suggests implementing policies that promote renewable energy adoption as a key strategy for climate change mitigation while structuring environmental taxes to incentivize sustainable production and consumption. Additionally, it calls for a tailored approach to ensure that globalization, population, and economic growth contribute effectively to mitigation efforts.