Do Green Technologies and Environmental Taxes Improve Circular Economy Performance? Assessing the Moderating Roles of Natural Resources and Nonrenewable Energy in the Nordic Region

ABSTRACT The transition toward a circular economy is a foundation of the Nordic sustainability agenda, aimed at reducing reliance on finite resources, enhancing waste management efficiency, and promoting innovation‐driven circular business models. In this regrad, this study investigates the impact of green technologies, environmental taxes, natural resources, renewable energy, nonrenewable energy, and urbanization on circular economy practices across the Nordic countries. Considering the strong economic interconnections among these countries, this study employs advanced second‐generation econometric techniques that address cross‐sectional dependence. The method of moment quantile regression (MMQR) findings reveal several important insights. Green technologies and environmental taxes consistently enhance circular economy performance across all quantiles, underscoring their role as catalysts for eco‐innovation and operational efficiency. In contrast, natural resources undermine circular economy development at lower quantiles, while renewable energy exhibits a positive and significant impact across the distribution, highlighting the critical role of sustainable energy transitions. Moreover, nonrenewable energy negatively affects circular economy performance at higher quantiles, whereas urbanization shows a consistent negative impact throughout the distribution. The interactive effects of green technologies with natural resources and nonrenewable energy indicate reductions in circular economy performance at lower to higher quantiles, reflecting heterogeneity in technological adoption and resource utilization. Robustness checks, endogeneity adjustments, and Kernel Regularized Least Squares (KRLS) machine‐learning analyses confirm the stability, consistency, and robustness of the estimated results. This study emphasizes the necessity of promoting green technologies, clean energy adoption, efficient recycling systems, and integrating circular economy principles into technological and policy frameworks to achieve sustainable and balanced growth across the Nordic countries.

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