Achieving carbon neutrality through digital infrastructure and public debt

Digital infrastructure has the potential to help achieve global carbon neutrality by promoting the use of renewable energy (RE) in economic operations. Therefore, it aids in the growth of a sustainable economy and society. Digital infrastructure and efficient budget allocation are the determinants of a modern and digital society. In this context, public debt plays an important role if it is invested in digital infrastructure projects. Taking this into account, we examine the relationship between carbon (CO₂) emissions and digital infrastructure moderated by public debt in G20 countries for the period 2003–2021. The study employed advanced econometric techniques for panel data that are robust to solving the problem of cross-sectional dependency. As a result, cross-sectionally augmented autoregressive distributed lag (CS-ARDL) estimation technique was employed. The results indicate that digital infrastructure has a negative impact on CO₂ emissions. Conversely, we find that public debt has a positive impact on CO₂ emissions. Furthermore, the study confirms that the interaction between digital infrastructure and public debt has a negative effect on CO₂ emissions. This implies that public debt, if used in digital infrastructure projects, leads to a decrease in CO₂ emissions. To reduce CO₂ emissions, it is recommended that G20 nations give priority to upgrading digital infrastructure while maintaining a manageable level of public debt.