Asymmetric effects of environmental taxes, growth, and renewable energy on consumption-based CO2 emissions in Italy

The reduction of consumption-based carbon dioxide emissions (CO 2 ) is crucial to attaining sustainable development goals, protecting the ecosystem, combating global warming, and preserving biodiversity for a better future. Based on this purpose, the current study aims to investigate the impact of environmental taxes, economic growth, and renewable energy on CO 2 emissions in Italy, using the nonlinear ARDL bounds test. The findings of the study reveal that (i) CO 2 emissions, environmental taxes, economic growth, and renewable energy variables are cointegrated; (ii) a 1 % increase in environmental taxes is equivalent to about a 0.08 million metric tonnes decrease in emissions, but a negative shock insignificantly affects CO 2 . (iii) There is an increase in CO 2 by 1.84 million metric tonnes for every 1 US dollar increase in GDP, but a negative shock insignificantly affects CO 2 ; (iv) For every 1 % increase in renewable energy, CO 2 decreases by 0.007 million metric tonnes. In line with empirical findings, Italy should strategically increase environmental taxes to consistently curb CO 2 emissions. Decouple economic growth from environmental damage by incentivizing green investment and innovation. Accelerate the renewable energy transition through subsidies and infrastructure to ensure it permanently reduces emissions, even during economic downturns.