The potency of resource efficiency and environmental technologies in carbon neutrality target for Finland

Abstract

Motivated by Finland’s ambitious transition to circular economy through the reduction of consumable nonrenewable resources and carbon neutral 2035, this study employs the Fourier approaches of stationarity, cointegration, causality alongside the long-run estimators of fully modified and dynamic least squares to examine the environmental aspects of resource productivity, environmental-related technologies, and export intensity over the period 1990–2020. Interestingly, given the two long-run estimators, the result established that a percent increase in raw material productivity yields a decline in greenhouse gas emission by a range of 61–70 percent. Additionally, there is a desirable and statistically significant impact of environmental-related technologies on greenhouse gas emission with an elasticity range of 0.16–0.18 in the long-run. While the intensity of export activities does not constitute a significant impact, economic growth as measured by Gross Domestic product (GDP) significantly hampers environmental sustainability in the long-run. Moreover, the causality approach including the Fourier Toda Yamamoto offers a strong inference along the insinuation of the long-run results for all the examined factors. Given this observation, relevant policy measures were highlighted to further guide decision makers in Finland on the pursuit of circular economy and carbon zero target.