Does cyclical innovation in environmental-related technologies make knowledge-based economies carbon neutral?

The knowledge-based economies have reacted by enacting stringent legislation and encouraging innovation in environmental-related technologies (IERTs) across organizations, such as academic institutions. Although previous research continues to support green innovation as a pro-cyclical concept, the irregular effect of IERT dynamics on CO₂e in knowledge-based economies has not yet been studied. The paper looks at the cyclical nexus between IERT and CO₂e in 37 knowledge-based economies using panel data from 1990 to 2019. The augmented mean group supported that an adverse change in IERT contributes to CO₂e during economic downturns. Second, the findings confirmed that positive dynamics in IERT reduces CO₂e during economic expansions. Third, the findings signified that trade openness, expansionary commercial policy, gross domestic product per capita, and expansionary monetary policy all increase CO₂e, while contractionary commercial policy and use of renewable energy all decrease CO₂e. Overall, the results of this study showed that there is a counter-cyclical association between IERT and CO₂e. It is suggested that to reduce CO₂e in knowledge-based economies, the government should support IERT in both economic contraction and expansion periods.