Integrating Green Energy, Green Tax, and Trade Openness: Pathways to Carbon Neutrality in Developing Economies

Abstract

This study examines the influence of Green Energy (GRN), Green Tax(GT), and Trade Openness (TO) on Carbon Neutrality (CRN) in 34 developing countries during the period 2003–2020. Using the Feasible Generalized Least Squares (FGLS) approach for regression analysis, the research examines how these factors influence carbon emission reduction, incorporating control variables such as Financial Globalization (FG), Efficient Resource Management (ERM), and Population Growth (PGR). The results show that Trade openness helps adopt green technologies and improves carbon neutrality, while efficient resource management helps make better use of natural resources. Population growth, along with global knowledge exchange, indirectly contributes to carbon neutrality by boosting the demand for eco-friendly goods. In contrast, green energy and green tax have not demonstrated significant effectiveness in reducing emissions in developing countries, primarily due to high costs, technological constraints, and weak policy enforcement. Similarly, financial globalization has not positively contributed to carbon neutrality, as capital flows often prioritize short-term profits over sustainable development. These findings illustrate the importance of positive strategies, including investments in green energy infrastructure, environmental tax reforms, and enhanced international cooperation to achieve carbon neutrality. The study underscores the necessary of balancing economic advancement and sustainability in developing nations