Advancing low-carbon economies in the Persian Gulf: the role of clean energy, industry 4.0, and fintech

The international move towards a low-carbon economy is an immediate necessity especially to the Persian Gulf region that is confronted with the dual role of disengaging its economies out of the reliance on fossil fuel and expanding the energy needs. Although technological innovation may facilitate this change, the region experiences intense challenges of scaling green solutions. This paper examines how the three variables of clean energy, Industry 4.0, and FinTech contributed to the process of substituting the economy of high carbon with the low-carbon economy of the Persian Gulf through a panel dataset of 1990 to 2024. With the help of generalized method of moments (GMM) regression, we discover that clean energy, Industry 4.0 and FinTech are important factors of abatement, but the implementation of green technology has a paradox: it is currently negatively correlated with carbon reduction, which is explained by low levels of adoption that are not enough to obtain economies of scale. We conclude that to make a low-carbon future a reality, there is a need to go beyond technology acquisition to policy-based large-scale investment, and regional integration.