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How are industrial sector optimization, mitigation policies and taxes contributing to carbon neutrality? Threshold Evidence from Europe

Author

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  • Xinyu WANG

    (North China University of Technology, Beijing, China.)

  • Wensen WU

    (North China University of Technology, Beijing, China.)

  • Jin ZHANG

    (Corresponding Author: School of Humanities, Shanghai Normal University, Shanghai.)

  • Gheorghe HURDUZEU

    (Bucharest University of Economic Studies, Bucharest, Romania)

  • Teodora Odett BREAZ

    (Faculty of Economic Science, 1 Decembrie 1918 University, 5100009 Alba Iulia Romania.Faculty of Engineering, Lucian Blaga University Sibiu, 550024, Sibiu, Romania)

  • Vasile Cosmin NICULA

    (Romanian Court of Accounts)

Abstract

There is a growing interest in the significance of product and process innovations in the battle against global emissions. However, from an innovation standpoint, mitigating strategies concentrated on patents, not the role played by trademarks. As a result, we compare the effectiveness of trademarks and patents in Europe in terms of mitigating the effects of patents. Their complementary role is tested using the interaction between the patent and the trademark (INV). Similarly, the study examines the threshold effect of carbon pricing (CTAX) and environmental policies (EPLY) for a period spanning from 2001 to 2019. The outcomes reveal that product and process innovation are driving towards carbon neutrality. The evidences further suggest that if innovation is above threshold (INV> 10.5) point, 1% increase in it can lower the emission by 2.09%. Moreover, further strengthening the environmental policies and 1% increase in taxes can neutralize emission by 6.9% and 2.93%, respectively. It is further observed that trade openness, energy consumption, economic growth and urbanization have detrimental effect on the environment. The study concludes that taxes can be used as a short run tool however, innovations in different sectors and stringent environmental policy can guide the economies towards sustainable economic growth while protecting the environment.

Suggested Citation

  • Xinyu WANG & Wensen WU & Jin ZHANG & Gheorghe HURDUZEU & Teodora Odett BREAZ & Vasile Cosmin NICULA, 2022. "How are industrial sector optimization, mitigation policies and taxes contributing to carbon neutrality? Threshold Evidence from Europe," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(2), pages 187-201, April.
    • Handle: RePEc:rjr:romjef:v::y:2022:i:2:p:187-201
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    References listed on IDEAS

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    1. Xinyu Wang & Yuanze Chai & Wensen Wu & Adnan Khurshid, 2023. "The Empirical Analysis of Environmental Regulation’s Spatial Spillover Effects on Green Technology Innovation in China," IJERPH, MDPI, vol. 20(2), pages 1-14, January.

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    More about this item

    Keywords

    Innovation; Carbon Taxes; Environmental Policy; Carbon Neutrality; Threshold regression;
    All these keywords.

    JEL classification:

    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models; Threshold Regression Models

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