Impact of financial development, trade, and energy consumption on environmental footprint in India: evidence from QARDL and wavelet coherence approach

The aim of this study is to analyze the impact of financial development, trade openness, renewable energy, and nonrenewable energy consumption on CO2 emissions in India by analyzing the quarterly data from 1980 to 2020. Quantile ARDL and Wavelet Coherence methods are employed to examine the nexus. In the long and short run, nonrenewable energy consumption, financial development, and trade openness have a positive impact on CO2 emissions. When emissions are already high, it suggests that financial development may also lead to increased CO2 emissions. Moreover, Renewable energy consumption has a negative impact on CO2 emissions irrespective of the emission level that whether it is high or low in the nations, which shows that if financial enhancement increases, carbon emissions decrease. Finally, we test the EKC hypothesis, and the QARDL findings support the EKC in India. Additionally, the wavelet coherence study found a causal relationship between the CO2 emissions and independent variables, and the findings under the Wald test reject the parameter constancy for all variables. To create effective policies for environmental deterioration, the empirical findings of the current analysis can be used as guidelines for policy implications.