Green innovation and carbon pricing have gained renewed attention as credible pathways for achieving low-carbon and sustainable economic growth, particularly following the maturation of energy transition policies across major economies. Both developed and developing countries increasingly prioritize green technological advancement and market-based carbon pricing instruments to meet long-term carbon neutrality commitments. Against this backdrop, this study aims to empirically examine the interlinkages between energy transition, green innovation, carbon pricing, and zero-carbon outcomes, with the objective of clarifying how these mechanisms jointly contribute to carbon neutrality.
To achieve this objective, the study employs a Dynamic Simulated Autoregressive Distributed Lag (DS-ARDL) framework, which allows for the assessment of both short-run dynamics and long-run adjustments under simulated policy shocks. Using annual data for China spanning 1990 to 2024, sourced from the World Development Indicators, the model captures nonlinear and forward-looking responses relevant to long-term decarbonization strategies. China offers a compelling case due to its rapid economic expansion, evolving energy structure, and increasing reliance on green policy instruments.
The empirical findings confirm that energy transition, green innovation, and carbon pricing play statistically significant and economically meaningful roles in advancing carbon neutrality. Specifically, the DS-ARDL estimates indicate that a 1% increase in next-generation energy deployment, clean and green technological innovation, and carbon pricing intensity leads to reductions in carbon emissions of 0.637%, 0.534 %, and 0.531 %, respectively. These results underscore the effectiveness of coordinated policy interventions in reducing emissions without undermining long-term economic performance.
From a policy perspective, the findings highlight the necessity for policymakers and legislators to adopt integrated and forward-looking strategies that simultaneously promote renewable energy adoption, incentivize green innovation, and enforce stringent carbon pricing mechanisms. Aligning these instruments is particularly critical for economies following an Environmental Kuznets Curve trajectory, where structural transformation and technological progress are essential for decoupling growth from emissions. Consequently, comprehensive and transformative policy measures are required across environmental regulation, energy system reform, green technology diffusion, and clean energy utilization to ensure the realization of carbon neutrality over the long term.
