Dynamic and Asymmetric Impacts of Green Growth and Innovation on Germany's Sustainable Development

ABSTRACT This study examines the effects of green growth (GG), green energy transition, and green technological innovation on environmental quality in Germany using annual data from 1990 to 2023. Grounded in the Environmental Kuznets Curve (EKC) hypothesis, which predicts nonlinear and transitional relationships between economic growth, structural change, and environmental quality, the Nonlinear Autoregressive Distributed Lag (NARDL) model reveals asymmetric short‐ and long‐run effects of positive and negative shocks in green economic indicators on CO 2 emissions. The results indicate that positive shocks in green growth and technological innovation significantly reduce emissions in the long term, whereas negative shocks in innovation increase them, highlighting the dual role of technological change in shaping environmental outcomes. Conversely, both positive and negative shocks in the green energy transition are associated with higher emissions, suggesting inefficiencies in Germany's energy transformation process. The Dynamic ARDL (DARDL) simulation results confirm that green growth and energy transition support long‐term emission reductions, while innovation‐driven activities may sometimes exacerbate environmental pressures. Overall, the findings emphasize the importance of aligning innovation policies with environmental goals and enhancing the effectiveness of green energy and growth strategies to accelerate Germany's transition toward a low‐carbon economy.