Asymmetric drivers of carbon emissions in Denmark using a nonlinear ARDL framework

This study examines the asymmetric effects of fossil fuel (FF) consumption, renewable energy (RE), innovation (INNO), economic activity, and trade openness (TRD) on CO₂ emissions in Denmark using the Nonlinear Autoregressive Distributed Lag (NARDL) framework. The results indicate a significant asymmetric relationship between FF consumption and emissions, in which positive changes increase CO₂ emissions more strongly than negative changes reduce them. RE and INNO are found to have statistically significant negative effects on emissions in the long run. In contrast, economic activity exhibits a positive but statistically insignificant long-run effect, suggesting no robust evidence of a direct income–emissions relationship after controlling for energy structure and INNO. TRD is insignificant in the territorial emissions model but becomes significant when using consumption-based emissions, highlighting the role of embodied carbon in trade. In general, the findings emphasize the importance of energy composition and technological factors in shaping emission dynamics, while also revealing structural asymmetries in the adjustment process. This study extends the asymmetric energy–environment literature by jointly examining FF consumption, RE, INNO, economic activity, and TRD in Denmark using the NARDL framework, while further validating the findings through consumption-based emissions, structural break analysis, and alternative INNO measures.