The Impact of Renewable Energy Share on CO₂ Emissions in D8 Countries

This study investigates the impact of the share of renewable energy on carbon emissions in D8 countries over the period 2000–2025, employing a panel data framework. The empirical analysis is conducted within a two-way fixed effects model, accounting for cross-sectional dependence, heteroskedasticity, and serial correlation through the use of country-clustered and Driscoll–Kraay standard errors. The renewable energy variable is operationalized in two distinct ways: as the share of renewable sources in electricity generation and as the share of renewables in total final energy consumption, each examined separately to ensure robustness. The findings indicate that the results are sensitive to the definition of the renewable energy indicator. While the lagged share of renewables in electricity generation does not exhibit a statistically significant mitigating effect on emissions, an increase in the share of renewables in total energy consumption is associated with a reduction in carbon emissions. These results suggest that limiting the energy transition to the electricity sector alone may be insufficient; rather, a comprehensive transformation of the overall energy mix appears to be more consequential for environmental outcomes. The estimated coefficients for income and its squared term display signs consistent with the Environmental Kuznets Curve hypothesis, implying a nonlinear relationship between economic growth and environmental degradation. Moreover, the strong and statistically significant effect of total energy consumption on emissions underscores the importance of scale effects in shaping environmental pressures. Country-specific assessments further reveal a heterogeneous pattern of energy transition across D8 economies. In countries with a high dependence on fossil fuels, expansions in renewable energy capacity provide only limited contributions to emission reductions. By contrast, economies that have achieved a more balanced restructuring of their energy portfolios demonstrate comparatively stronger environmental performance. Overall, the study highlights the necessity of broadening the sectoral scope of renewable energy policies and reducing structural dependence on fossil fuels to achieve meaningful emission mitigation.