Do Trade-Adjusted Emissions Perform Better in Capturing Environmental Mishandling among the Most Complex Economies of the World?

With the emergence of new environmental challenges, the direction of environmental research is changing exponentially. To implement anti-warming and pro-environmental interventions, it is vital that we adopt robust and reliable measures of environmental degradation. Any exception to this will breed inaccurate forecasts, generating loopholes in the policies. Thus, in a groundbreaking occurrence within the realm of literature, we juxtapose how trade-adjusted emissions (CCO2) and total emissions (CO2) respond as we set shock on environmental technology (EVT), economic complexity index (ECI), natural resource rent (NRT), research and development (R&D), and energy efficiency (EFX) from 2000 to 2020 across the OECD nations. We also control GDP and renewable energy consumption (RWE). The findings of the novel non-parametric method of moments quantile regression (MMQR) reveal that EVT has an insignificant positive impression on CCO2, whereas it has a heterogeneous impact on CO2 emissions. Moreover, ECI cuts trade-adjusted emissions, indicating that complex economies like OECD’s have better emissions reduction potentiality through export diversification. However, we unveil a paradoxical relationship in the ECI-CO2 nexus since total emissions do not account for trade-adjusted emissions. R&D surges CO2 and CCO2 emissions, where the latter is statistically insignificant. Furthermore, EFX increases total emissions, indicating a rebound effect among the OECD territories. We also note different causal relationships to rectify the results’ robustness. Our novel findings thus enrich the streaming literature by juxtaposing how different measures of environmental degradation respond over a series of empirical shocks and establishing that trade-adjusted emissions are better indicators of environmental degradation, exclusively in the context of complex economies.