Striving towards 2050 net zero CO₂ emissions: How critical are clean energy and financial sectors?

The development of clean energy and financial sectors have been highlighted as critical factors in tackling climate change and achieving net zero emissions goals. Hence, using a dataset for the top 20 emitter countries from 1990 to 2019, this study examines whether clean energy consumption, financial development, human capital, population, and economic growth are connected with environmental quality through a reduction in carbon emissions. The long-run estimates show that renewable energy utilization, financial development, and human capital are significant in reducing CO₂ emissions in the quest for net zero emissions. Contrarily, economic growth and population have a increases CO₂ emissions. The results of the causality test show a two-way causality between renewable energy use, financial development, economic growth, population, and CO₂ emissions. Moreover, one incidence of unidirectional causality is observed from CO₂ emissions to human capital. Based on the findings, policy implications are suggested.