Quest for environmental management and sustainability: Evaluating the drivers of territorial and consumption-based carbon emissions in G-20 economies.

The rising levels of carbon emissions are a significant concern for global environmental management and sustainability. The situation is further exacerbated by increasing economic activities and unsustainable practices, particularly in G-20's economies. This study explores how environmental efficiency, natural resource rents, banking development, energy transition, industrial value addition and economic growth shape territorial and consumption-based carbon emissions across G20 economies from 1996 to 2020. In addition, the novelty of the study lies in its comprehensive approach, integrating Epsilon-Based Measure (EBM) in Data Envelopment Analysis (DEA) to measure environmental efficiency and utilizing Principal Component Analysis (PCA) to develop indices for natural resource rents and banking development. Driscoll-Kraay standard error model is applied to explore the drivers and to draw inferences about the dynamic relationships of territorial and consumption-based carbon emissions. The findings reveal a consistent positive relationship between natural resource rents and economic growth with territorial and consumption-based carbon emissions. In contrast, environmental efficiency, energy transition, and industrial value addition are strong negative drivers of carbon emissions, aligning with global sustainability efforts. Furthermore, banking development plays a critical role by negatively influencing carbon emissions, suggesting that a robust financial system can facilitate investments in sustainable energy. The study employs various long-run testing methods, including AMG, CCEMG, FGLS, FMOLS, and PCSE, ensuring the robustness of the findings. These findings offer valuable insights for policymakers balancing economic growth with environmental stewardship. The study's implications include recommendations for enhancing energy efficiency, promoting financial systems that support green investments, and fostering policies that encourage sustainable development in both national and global contexts.