Decarbonizing Japan: The role of nuclear energy and environmental taxation in mitigating CO2 emissions

Abstract

• NE significantly reduces CO 2 emissions. • ET positively impacts environmental quality. • Economic growth linked to higher CO 2 emissions. • NARDL method confirms robust results. • Policy recommendations for sustainable growth. Carbon dioxide (CO 2 ) emissions are the primary contributor to environmental deterioration, which is directly linked to changes in climate and worldwide heating and threatens the ecosystem's continued viability. CO 2 , which is found in the sought-after power produced from fossil fuels, is the primary component that must be mitigated to attain global climatic stability. Therefore, this research aims to study the long-term link between nuclear energy (NE), environmental tax (ET), and CO 2 emissions in Japan while incorporating economic growth (GDP) during 1994–2022. The current study uses the nonlinear autoregressive distributed lag (NARDL) method to obtain accurate results regarding the positive and negative shocks of nuclear energy and environmental taxes. The results show that (i) NE in Japan decreases environmental decline in both shocks. (ii) ET positively affects environmental pollution in negative shock. (iii) GDP has beneficial effects on environmental deterioration. Additionally, the findings of the NARDL estimates and the results of the robustness checks are consistent. According to the evidence at hand, ET in Japan could become a beneficial tool for enhancing environmental quality instead of a tool for increasing budget capital.