The Role of Carbon Taxing and Green Innovation in Achieving Decarbonization Goals in Global South

Environmental degradation, pollution, and rising temperatures pose a hazard to the world. A carbon-free economy requires policies to preserve sustainability, development, and the environment. Carbon taxing has emerged as a new hope for low-carbon sustainable economic growth after its successful trial in the developed and developing world. Implementing carbon taxation, energy transition, and green innovation can provide effective answers for defending the globe from environmental challenges. Therefore, both developed and developing economies focus on carbon taxing and green innovation to cope with carbon neutrality targets. The objectives of this study were to examine carbon taxing, green innovation, energy transition, digital infrastructure, sustainable mineral extraction and gross domestic product in acquiring carbon neutrality in Global South (China, India and Pakistan). For this purpose, the global south dataset from 1990–2022 was analyzed. Novel econometric methods Cross-sectional augmented autoregressive distributed lag (CS-ARDL) were used for estimations. The results reveal that carbon taxing, green innovation (GI), energy transition (EN), digital infrastructure (DI), sustainable mineral extraction (MN) and gross domestic product (GDP) significantly affects carbon neutrality. Furthermore, carbon taxing, energy transition, and green innovation significantly assist in attaining carbon neutrality in the long run. Green innovation has a coefficient of 4.3156 with a p-value of 0.000, indicating a highly significant impact on decarbonization. Energy transition, digital Infrastructure, mineral extraction, and GDP also show statistically significant effects with p-values all below 0.01. Policy measures are required in carbon taxation, energy transition, green innovation, and digital infrastructure usage in achieving carbon neutrality. The governments should encourage the use of green energy solutions through subsidies and support technology that reduces carbon emissions. This study contributes a novel framework of carbon taxing and green innovation policies for carbon neutralization in the global south.