Assessing the Impact of Green Technological Innovation, Renewable Energy Consumption and Financial Development on Environmental Sustainability in Nigeria

Abstract

This study employed the novel Dynamic Autoregressive Distributed Lag (DYARDL) model to analyze the impact of renewable energy consumption, green technological innovation and financial development on CO2 emissions in Nigeria. Furthermore, Fully Modified Ordinary Least Square (FMOLS) and Canonical Cointegrating Regression (CCR) approaches are employed for robustness checks. The DYARDL results indicate that green technological innovation, renewable energy consumption and financial development respectively, promote environmental sustainability in the longrun, whereas, in the shortrun, green technological innovation is negatively related to the environmental quality in Nigeria. However, trade openness contributes towards environmental degradation both in the shortrun and the long run. The result of the Dynamic ARDL in this study is in conformity with the findings from both the FMOLS and CCR models. The study therefore, recommends that in order to achieve the target set by Nigeria Renewable Energy Master Plan (REMP) of generating 36% of its electricity from renewable energy sources by 2030, with a primary focus on hydro, Biomass-based, wind and solar energy sources, government should provide fiscal incentives to private investors in form of tax holidays, capital incentives, moratorium on import duties and loan opportunities for renewable energy projects in the country. Also, policymakers should strengthen policies that encourage green technological   investments, in order to promote economic growth while also further reducing environmental emissions.