Curbing environmental degradation in Oceanic-Asia: does innovation matter?

This study investigates how innovation moderates the relationship between energy use and environmental degradation across 45 Oceanic-Asian countries from 1990 to 2018. Anchored in the energy-led degradation hypothesis and using carbon dioxide emissions as a proxy for environmental harm, we apply a battery of econometric techniques, including bootstrap OLS, to unbalanced panel data. Results consistently show that renewable energy significantly reduces emissions, while nonrenewable energy increases them. Innovation independently lowers emissions and interacts asymmetrically with energy types: it weakens the beneficial impact of renewables and mitigates the harmful effects of nonrenewables. These findings suggest that innovation plays a dual role—dampening both the positive and negative environmental effects of energy consumption. By attenuating carbon emissions, innovation emerges as a critical determinant of environmental quality and a strategic lever for advancing green development. The study fills a key gap in the literature and offers new insight into the energy–environment–innovation nexus.