Green Growth in Scandinavia: Assessing The Role of Environmental Taxation, Green Innovation, Trade, and Urbanization in Advancing Clean Energy Consumption

Abstract

The research analyses the drivers of clean energy use (CEU) in Scandinavian countries by assessing the influence of environmental taxation (ETR), green innovation (GRI), trade openness (TRD), economic growth (ECG), and urbanization (URB). In exploring these relationships, the research is mainly theorized within the Energy Transition Theory and Environmental Kuznets Curve (EKC) hypothesis framework while employing panel data from 1990 to 2023 and advanced econometric tools. Results show that while GRI and ECG significantly contribute to adopting clean energies, the URB process enhances CEU through improved infrastructure and technology adoption. It reveals that environmental taxation has an adverse short-term impact by raising energy costs, while trade openness yields ambiguous results. The study confirms the theoretical frameworks and highlights the interplay among socio-technical and economic dimensions as critical enablers and barriers for energy transitions. Thus, environmental taxation should be complemented with subsidies, more significant investments in green innovation should be made, and economic growth should be used to ensure clean energy infrastructure and clean energy in urban planning. These findings provide actionable strategies to fasttrack clean energy transitions in Scandinavia and beyond, thus ensuring economic growth and harmony with environmental sustainability.