Investigating the Influence of Renewable Energy Use and Innovative Investments in the Transportation Sector on Environmental Sustainability—A Nonlinear Assessment

Ecologically sustainable economic development is increasingly recognized as essential to global efforts to improve and protect environmental and socio-economic conditions. The transportation sector is also important regarding the movement of human beings and goods. Fossil fuels are primarily used in transport vehicles and emit carbon dioxide into the atmosphere. Hence, innovative investments in the transportation system and the use of renewable energy play a key role in overcoming this lingering problem. This study utilizes nonlinear autoregressive distributed lag (NARDL) methods to uncover key drivers influencing innovative investments in the transportation sector and the impact of renewable energy use on environmental sustainability in France between 1995 and 2020. The results indicate that renewable energy use and transport infrastructure innovations positively and negatively impact environmental sustainability. Both variables have different influences on the dependent variable depending on the economic shock period. Based on the outcomes, this study offers the following significant policy insights: (i) France could invest in innovations in renewable energy sourcing and incentivize switching from combustion engine-based transport systems. (ii) France should commit to the Europe 2020 strategy for green growth to ensure resource efficiency and promote environmental sustainability, which requires a coordinated effort to invest in smart transport systems that leverage technologies like the Internet of Things, artificial intelligence, and big data analytics. (iii) Given that two-thirds of France’s electricity is produced from nuclear sources, the government needs to implement policies in the renewable energy sector to reduce over-reliance on nuclear energy sourcing.