Energy transition, digitalization, financial development, and human capital shape pathways to carbon neutrality in South Asia

This study examines the key determinants of carbon emissions (COE) in South Asia, focusing on energy transition (ENT), digitalization (DIG), financial development (FDT), and human capital (HCT). Using panel data from 2000 to 2023 and the cross-sectional autoregressive distributed lag (CS-ARDL) model, it offers novel insights into both direct and moderating effects. A major finding is that FDT negatively moderates the effects of ENT and DIG on COE, implying that financial development plays a crucial role in enhancing the environmental benefits of clean energy and digital technologies. ENT, DIG, and HCT are found to reduce COE significantly in both the short and long term, while FDT contributes to higher emissions. These results have important implications for achieving Sustainable Development Goals (SDGs) 7, 9, and 13 and advancing COP28-aligned carbon neutrality. The study underscores the importance of green finance, digital and renewable energy expansion, and human capital development as key drivers for emissions reduction and sustainable growth in South Asia.