Green Innovation, Economic Growth, and CO2 Emissions: An Analysis for Sustainable Development in Indonesia
Helene Elisabeth Simon (a), Ryan Juminta Anward (b)

a) Fakultas Ekonomi dan Bisnis, Universitas Airlangga, Surabaya, Indonesia
b) Fakultas Ekonomi dan Bisnis, Universitas Airlangga, Surabaya, Indonesia

Abstract

Global climate change, driven by rising CO2 emissions, has become a critical issue for policymakers and researchers. This study examines the relationship between green innovation, economic growth, and CO2 emissions in Indonesia, utilizing a Vector Error Correction Model (VECM) approach. Focusing on the period from 1990 to 2019, the study investigates both the short-term and long-term impacts of environmental technology patents (as a proxy for green innovation), renewable energy consumption, and economic growth on CO2 emissions. The findings indicate that both green innovation and renewable energy consumption significantly reduce CO2 emissions in both the short and long term, underscoring their importance in Indonesia^s transition towards sustainable development. Conversely, trade openness contributes to higher emissions, highlighting the need for balanced policies that integrate environmental protection with economic growth. The results provide valuable insights for policymakers aiming to decouple economic growth from environmental degradation and emphasize the role of technological innovation in achieving sustainability

Keywords: Green Innovation, Economic Growth, CO2 Emissions, VECM

Topic: Development economics