Bridging innovation, sustainability, and equity: how green technology drives inclusive green economy in developed economies

Achieving an inclusive green economy (IGE) is an urgent global imperative that integrates environmental sustainability with human well-being and equitable opportunities. Developed economies that have experienced environmental degradation and income inequality are now committed to advancing IGE. This study examines the impact of green technology innovation (GTI) on IGE across 31 developed countries over the period 2000–2021. Specifically, it explores the mediating role of renewable energy consumption (REC) and the threshold effect of environmental tax. The Panel-Corrected Standard Error (PCSE) method, the Panel Threshold Model, the Modified Sobel Test, and the System Generalized Method of Moments (System GMM) are employed to conduct this study. The findings are as follows: (1) GTI has been proven to enhance IGE in developed countries; (2) the link between green technology innovation and IGE is positively mediated by REC, which accounts for 34.65% of the total effect; and (3) environmental tax has an optimal threshold effect on the impact of green technology innovation on IGE; when it is lower than 2%, green technology innovation exhibits a stronger contribution to IGE, while the boosting effect will decrease by 23% when exceeding 2%. This study also gives practical recommendations for developed countries as well as emerging nations. For instance, developed countries should set a reasonable level of environmental tax, whereas emerging nations should increase environmental tax due to the early stages of environmental regulations.