Decarbonizing industry: Temporal and econometric evidence on renewable energy and innovation in the World's top manufacturing economies

Abstract As the engines of global industrialization accelerate, so too does the urgency to decouple economic growth from environmental degradation. This study investigates the long‐term environmental consequences of fossil fuel dependence, renewable energy deployment, and green innovation in the world's top 10 manufacturing economies from 1990 to 2022. Positioned at the intersection of industrial complexity and ecological transition, the analysis offers both temporal and econometric evidence to examine how traditional and frontier determinants shape environmental quality. Using CO 2 emissions, PM2.5 pollution, and ecological footprint as proxies, the Cross‐Sectionally Augmented Autoregressive Distributed Lag (CSARDL) and Generalized Least Squares (GLS) estimators are employed to address slope heterogeneity and cross‐sectional dependence. Results indicate that fossil fuel consumption significantly worsens all environmental indicators, while renewable energy use consistently mitigates pollution, with amplified benefits observed after the 2015 Paris Agreement. Green innovation exhibits the strongest effect on PM2.5, suggesting sectoral disparities in clean technology diffusion. Additionally, human capital improves environmental outcomes by enabling green adoption, whereas economic complexity—absent complementary innovation—exacerbates degradation. These findings underscore the need for tailored policy responses, including enhanced investment in clean energy infrastructure, innovation systems, and skills development aligned with sustainability goals. The study contributes to the empirical discourse on green industrialization and offers evidence in support of SDGs 7 (clean energy), 9 (innovation), 12 (responsible production), and 13 (climate action).

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