Environmental innovation and environmental sustainability in a Nordic country: evidence from nonlinear approaches

Environmental sustainability has been a priority of energy study experts, yet, until recently, the approaches largely ignored innovation issues. This paper investigates the relationship between environmental innovation and environmental sustainability in a Nordic country, Norway, from 1990:Q1 to 2019:Q4. In Norway, climate change, protection of the ozone layer, biodiversity, urbanization, acidification, eutrophication, persistently high toxic waste, and increased fragility have injected volatility and uncertainty into the Norwegians—a reality that may continue for a while. This study is unique in that it uses the nonlinear ARDL approach to analyze in depth how environmental innovation affects environmental sustainability in Norway while controlling for economic growth, renewable energy, and financial development. In particular, the findings reveal that (i) environmental innovation improves the environment in Norway over long-term horizons; (ii) strengthening patents on environmental innovations can foster clean living, green growth, and zero CO(2) emissions; (iii) investing in renewable energy sources benefits the Norwegian environment by reducing carbon emission growth; and (iv) economic growth and financial development promote CO(2) emission growth. The policy consequence is that Norway’s policymakers should continue to invest in cleaner technologies and encourage environmental education and training of employees, suppliers, and consumers.