Innovation, Income and CO2 Emissions

Human-induced climate change contributes 92% of global carbon emissions. While CO2 is an integral part of earth’s carbon cycle, its emissions are causing rising temperature which the global leaders addressed during Paris agreement in 2015 and vowed to reach net zero carbon emissions by 2050. To achieve the target, global stakeholders have identified innovation as a key driver to explain the significance of carbon emissions during income growth and its impact on the environment. Global Innovation Index (GII) pillars’ impacts on economic growth and CO2e emissions under “EKC” framework were assessed in this paper through GMM estimation method to identify innovation impact. A global panel data involving 75 countries for a period of 2012-2021 were analysed and suggests support the EKC hypothesis, as CO2e emissions increase as earnings per capita increases but begin to decline as growing income crosses a tipping point. While Institutions, infrastructure, human capital and research and creative outputs were found significant and can play significant role to mitigate CO2e emissions, market sophistication, business sophistication, knowledge output interaction variables did not meet the significance level.