Analyzing the non-linear impact of carbon dioxide emissions on renewable energy in Commonwealth nations

Addressing the transition to renewable energy remains one of the most urgent global priorities, as it directly influences climate change mitigation, sustainable economic growth, and long-term energy security. This study examines the intricate relationships between financial development, environmental pressures, the digital economy, and renewable energy, with a particular focus on the non-linear relationship between carbon dioxide (CO2) emissions and renewable energy development across 51 Commonwealth nations from 1990 to 2022. Using advanced non-linear econometric techniques, such as Panel Threshold Autoregressive (PTAR) and Panel Smooth Transition Autoregressive (PSTAR), as well as System Generalized Method of Moments (GMM), the analysis reveals a threshold-dependent dynamic relationship between CO2 emissions and renewable energy. The results indicate that at higher emission levels, CO2 emissions significantly hinder the expansion of renewable energy. In contrast, at moderate emission levels, a more complex interaction emerges in which renewable energy growth may coexist with rising emissions due to transitional inefficiencies and technological adjustments. These findings highlight the importance of differentiated and context-specific policy strategies. Governments are therefore encouraged to adopt targeted emission-reduction instruments (e.g., carbon pricing, energy-efficiency standards), promote renewable energy through green finance and fiscal incentives, and leverage digital and financial innovations to enhance the large-scale integration of renewables. Overall, the study contributes to understanding how economic, technological, and environmental factors interact non-linearly to shape the green transition, providing concrete policy guidance for achieving sustainable growth and resilience in Commonwealth countries.