Carbon neutrality target for G7 economies: Examining the role of environmental policy, green innovation and composite risk index.

To achieve zero carbon or achieving carbon neutrality target is of great importance to many countries around the globe especially post Paris climate agreement. This study, unlike previous studies, evaluates the role of environmental policy, green innovation, composite risk index, and renewable energy R&D in achieving carbon neutrality targets for G7 economies from 1990 to 2019. The results confirmed the validity of the EKC hypothesis for G7 economies. Further, the result shows that environmental policy, green innovation, composite risk index, and renewable energy R&D help control carbon emissions. In contrast, income reveals a positive influence on environmental degradation. Furthermore, bidirectional causality has been reported in environmental policy, composite risk index, green innovation, and the CO 2 emissions, while unidirectional causality running from GDP and renewable energy R&D to CO 2 emissions. Based on the empirical findings, it is suggested that environmental policies should be strengthened, promote green innovation and renewable energy research and development expenditures, and political stability and institutional quality must be stabilized to lowers sectoral risks that would help a sustainable environment. • Environmental Kuznets Curve is valid for G7 economies. • Green innovation, composite risk index leads to achieving carbon neutrality. • Environmental Policy and Renewable Energy R&D helps combat carbon emissions. • Bidirectional causality exists between policy, risk index, and CO 2 emissions. [ABSTRACT FROM AUTHOR]