Do green innovation and financial globalization contribute to the ecological sustainability and energy transition in the United Kingdom? Policy insights from a bootstrap rolling window approach

Abstract Environmental sustainability and energy transition, especially the renewable energy transition, have become critical concerns of nations throughout the world in recent decades. The sustainable and eco‐friendly technologies have led to more sustainable methodologies, substantial stewardship of our natural resources, and the conversion to renewable energy sources, all of which have been demonstrated to benefit the environment significantly. However, prior studies have overlooked the ecological sustainability and energy transition effects of green technology innovation. Therefore, this study endeavored to investigate the role of green innovation (lnGRN) and financial globalization (lnFIG) on the sustainability of the environment (lnEFT) and energy transition (lnENT) in the United Kingdom using quarterly data for the period from 1995 to 2020. The study applied the time‐varying (bootstrapping) rolling window technique, which can retrieve casual associations among variables at different periods of sub‐samples. Besides this, the method is advantageous for addressing the non‐consistency of parameters and eliminating the pre‐test distortion. The novel Bootstrap Rolling‐Window full‐sample causality technique results demonstrate that lnGRN and lnFIG have unidirectional causality toward lnEFT and lnENT. Furthermore, the bootstrap rolling‐window subsamples in the final stage indicate that lnGRN and lnFIG mitigate lnEFT, whereas lnGRN and lnGDP enhance energy transition. On the other hand, lnGDP and lnETX contribute to environmental deterioration, while lnFIG hinders the energy transition. Several important policy implications are derived from the results to encourage financial globalization, green innovation technologies, renewable energy resources consumption, and environmental taxes.

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