Examining the impact of environmental technologies on carbon emissions in G-20 countries: an alternative environmental hypothesis proposal (EGC)

Economic growth is often accompanied by rising CO₂ emissions, raising questions about the compatibility of growth and environmental sustainability. While the Environmental Kuznets Curve (EKC) and Innovation Claudia Curve (ICC) hypotheses examine the growth–environment and innovation–environment relationships separately, they overlook the joint role of economic scale and environmental innovation. This study addresses this gap by proposing the Environmental Growth Curve (EGC) hypothesis, which captures the nonlinear interaction between environmental technology and economic growth. Using panel data for G-20 countries over the period 1990–2022, the EKC, ICC, and EGC hypotheses are examined within a unified framework. The models are estimated using the Driscoll–Kraay robust estimator, and the robustness of the findings is assessed through a two-step system GMM approach. The results confirm the validity of the EKC and ICC hypotheses, providing strong evidence in support of the EGC hypothesis. An inverted U-shaped relationship is identified between the interaction of environmental technology and economic growth, as well as CO₂ emissions, indicating that environmental innovation contributes to emission reductions once it is deployed at a sufficient economic scale. The findings suggest that aligning environmental innovation policies with economic scale is crucial for achieving effective and sustainable emission reductions in G-20 countries.