Energy transition and CO₂ emissions: Fresh insight from low, middle and high-income countries

The energy transition to sustainable systems is critical in mitigating carbon dioxide (CO₂) emissions and achieving energy security. This study systematically analyzes the impact of transitioning from fossil fuels to renewable energy sources across countries of low, middle, and high-income levels, considering complex factors such as social aspects, legislative actions, and economic conditions that influence these transitions. For this aim, the GreenQ index introduced by Lau et al. (2023); a robust econometric model, the Cross-sectionally Augmented Autoregressive Distributed Lag (CS-ARDL) technique by Chudik and Pesaran (2015); and the Dumitrescu and Hurlin (2012) non-Granger causality test are applied to panel data from 1965 to 2021 of 53 countries. Findings highlight that advancements in green energy technologies and stringent legislative frameworks significantly reduce CO₂ emissions, particularly in high-income countries. Additionally, the results show that trade openness is associated with a slight reduction in emissions in low- and middle-income countries, while urbanization and political liberties have varying impacts depending on the income level of the country.