The Role of Country-Level Governance in the Renewable Energy–Carbon Emissions Relationship: Evidence from RECAI-Selected Countries

This study examines the relationship between renewable energy consumption (REC) and carbon dioxide (CO 2 ) emissions and investigates the moderating role of country-level governance in 39 Renewable Energy Country Attractiveness Index (RECAI) economies over the 1996–2020 period. Drawing on institutional and environmental governance theories, this study evaluates whether governance strengthens the environmental benefits of renewable-energy consumption. Unlike previous studies that primarily focus on aggregate governance measures, this study separately examines six governance dimensions: control of corruption, political stability, rule of law, government effectiveness, regulatory quality, and voice and accountability. Using panel data from the World Bank, the analysis employs fixed-effects estimation and validates the findings through robust regression, the generalized method of moments (GMM), and panel-corrected standard error (PCSE) approaches. The results indicate that renewable energy consumption significantly reduces both CO 2 emissions per capita and total CO 2 emissions in the long run. The findings further show that governance significantly moderates the renewable energy–CO 2 emissions relationship, with stronger governance enhancing the emission-reducing effect of renewable energy consumption. Governance mitigates the environmental impacts associated with urbanization and industrialization, highlighting the importance of institutional quality in managing the structural drivers of emissions. The robustness analyses confirm the consistency of the main results across the alternative estimation techniques. This study contributes to the literature by providing evidence of the distinct roles of individual governance dimensions in shaping environmental outcomes in economies actively engaged in renewable energy development. These findings suggest that renewable energy expansion and governance reforms should be pursued simultaneously to achieve more effective carbon emission reduction strategies.