Energy Transition in an Urbanizing World: Long-Run Drivers of CO₂ Emissions in 77 Emerging and Developing Economies

Abstract

This study investigates the major determinants of CO₂ emissions in 77 emerging and developing economies from 1990 to 2023, focusing on the roles of renewable energy consumption, urbanization, forest cover, access to clean fuels, and total energy use. The Westerlund cointegration test confirms the existence of a long-run equilibrium relationship among the variables, while the CIPS unit root test accounts for cross-sectional dependence within the panel structure. Empirical findings based on Driscoll–Kraay standard errors reveal that renewable energy consumption significantly contributes to reducing CO₂ emissions, whereas urban population growth, loss of forest cover, and increased energy use intensify emission levels. Access to clean fuels exhibits a negative but statistically insignificant effect on emissions. The Panel Dynamic OLS (DOLS) results further validate these findings, underscoring both the transformative potential of renewable energy adoption and the persistent environmental pressures associated with rapid urban expansion and rising energy demand. Overall, the outcomes highlight the necessity for integrated and forward-looking policy frameworks that accelerate renewable energy deployment, promote sustainable urban development, and strengthen land-use governance to support low-carbon transitions in emerging and developing economies.