Abstract
Fiscal decentralization and green innovation are important to a country’s economic progress,
but the externalities of increased pollution as a result of a rise in the energy used and economic
growth must not be overlooked. The destruction of the environment presents a serious threat to
human existence. South Africa, like several nations, has been working on reducing its dependence
on fossil fuels such as coal by utilizing modern energy-efficient technologies that allow to establish
a more carbon-neutral economy. Several attempts have been made to identify the major sources of
environmental deterioration. Within the Stochastic Impacts by Regression on Population, Affluence,
and Technology (STIRPAT) framework from 1960 to 2020, this study aims to check empirically the
effect of fiscal decentralization (FD), green technological innovation (GI), trade openness (OPEN),
population size (POP), per capita GDP (GDP), per capita GDP squared (GDP2), institutional quality
(INS), and energy consumption (EC) on carbon emissions (CO2) in South Africa, as given its fast
economic progress the country is facing problems with CO2 emission. The recently developed novel
dynamic autoregressive distributed lag (ARDL)-simulations framework has been used. The outcomes
of the analysis indicate that (i) FD, GI, and INS improve environmental sustainability in both the
short and long run; (ii) OPEN deteriorates environmental quality in the long run, although it is
environmentally friendly in the short run; (iii) per capita GDP increases CO2 emissions, whereas
its square contributes to lower it, thus validating the presence of an environmental Kuznets curve
(EKC) hypothesis; (iii) POP and EC contribute to environmental deterioration in both the short
and long run; and (iv) FD, GI, OPEN, POP, GDP, GDP2, INS, and EC Granger cause CO2 in the
medium, long, and short run, suggesting that these variables are important to influence environmental
sustainability. In light of our empirical evidence, this paper suggests that the international teamwork
necessary to lessen carbon emissions is immensely critical to solve the growing trans-boundary
environmental decay and other associated spillover consequences. Moreover, it is important to
explain responsibilities at different tiers of government to effectively meet the objectives of low CO2
emissions and energy-saving fiscal expenditure functions.