Environmental policy, digital economy, and green innovation: navigating the low-carbon transition in emerging seven economies

The development of effective climate strategies for emerging economies focuses on balancing low-carbon transitions with sustaining economic growth through innovation and digital economy. The emerging seven (E7) economies have experienced rapid development in recent years, but this progress has come at the cost of increasing carbon emissions. Our study explores the interaction of factors that shape the low-carbon transition, with a focus on the impact of environmental policies, the adoption of digital technologies, and green innovation on consumption-based carbon emissions. Using the method of moment quantile regression, we found that while economic growth drives an increase in carbon emissions, renewable energy acts as an effective mitigating tool in emerging economies. Digitalization of the economy exhibits a significant positive influence on carbon emissions, with its effect slightly diminishing at higher emission levels. Environmental policy negatively influences carbon emissions, with its impact strengthening at higher emission quantiles. Green innovation emerges as a vital tool in mitigating carbon emissions, particularly in the most emission-intensive environments. These results hold significant implications for policymakers, highlighting the need for targeted interventions that promote renewable energy adoption, strengthen environmental regulations, and foster green innovation. This study offers key insights into the factors shaping the low-carbon transition in E7 economies, supporting more effective, equitable, and collaborative global climate action.