Linking green innovation to environmental quality in Saudi Arabia: an application of the NARDL approach

Climatic events and environmental problems have emerged as worldwide concerns. In the era of global climate change, green innovation is widely believed to ease environmental pollution. Against this backdrop, this study represents the first effort to explore the uneven effects of environmental technology (ENVT) on CO2 emissions controlling economic progress, energy use, openness to trade, and financial development in Saudi Arabia. This study utilizes datasets between 1990 and 2020 from several international organizations and performed the “Nonlinear Autoregressive Distributed Lag (NARDL)” estimation. A set of similar estimation techniques crosschecks the reliability of the NARDL output in addition to the Toda-Yamamoto causality check. The outcomes reveal that due to the low scale of the patents in ENVT relative to the total technologies in Saudi Arabia, the positive components of ENVT remain insignificant to cause environmental pollution, while its negative waves are responsible for a rise in the pollutant emissions both in the long and short terms owing to low level of environmental technology. Economic growth, energy use, and trade volume contribute to pollutant emissions, while financial development remains insignificant to influence the latter. The causality analysis also authenticates the NARDL outcomes and supports the robustness. Therefore, Saudi Arabian policymakers need to focus on enhancing the patent in ENVT and engage in more renewable energy to benefit from them and ensure environmental sustainability.