Abstract

Various nations are striving to attain zero carbon goals by utilizing environmentally friendly technology and promoting sustainable development. Consequently, this analysis endeavors to ascertain the pivotal role of sustainable development in enhancing environmental quality. The present study investigates the influence of green finance, environmental taxes, financial development, renewable energy (REN), green growth, and income per capita on carbon emissions in 16 OIC economies over the time span from 2007 to 2021. Employing the fully modified ordinary least square (FMOLS) method, this study aims to determine the impact of green finance, environmental taxes and financial development on environmental quality, taking into account various plausible variables according to the environmental Kuznets curve (EKC) paradigm. In order to ensure robustness, the study also adoptsthe dynamic ordinary least square(DOLS) method in conjunction with FMOLS to gauge the impact of green finance, environmental taxes and financial development on environmental quality. The findings indicate that CO2 emissionis significantly influenced by green finance, environmental taxes, financial development, renewable energy, green growth, and income per capitawithin the context of OICnations. Moreover, the effect ofall independent variables (except GDP) and CO2 emissions is inversely proportional. Based on the findings, policymakers are advised to prioritize the transformation of their respective energy systems in a manner that will surpass previous expectations by significantly reducing energy-related CO2 emissions.