Green energy imports, FDI, Stock market capitalization, globalization and environmental degradation in China: Paving the Path to Sustainability in COP26 Agenda

Abstract

Abstract This paper explores the complex dynamics of green energy imports, foreign direct investment (FDI), stock market capitalization, globalization, and CO2 emissions in the context of environmental deterioration. We examine the short- and long-run effects of these factors on CO2 emissions using a Nonlinear Autoregressive Distributed Lag (NARDL) model. The findings show that positive and negative shocks have different impacts on CO2 emissions. Green energy imports and some features of globalization have the potential to significantly cut CO2 emissions in the short and long run. In addition, FDI and stock market capitalization show short-term increases in CO2 emissions. To improve environmental degradation under COP26, we suggest focused policy solutions such as supporting green investments, improving environmental legislation, encouraging sustainable financing, creating green trade agreements, and raising public awareness. Implementing these regulations can lead to more ecologically responsible and long-term economic prosperity.