Combining the effects of industrialization and oil prices on CO2 emissions: What role do renewable energy, urbanization and financial crisis play?

Transitioning to a low‐carbon economy is essential for sustainable development; however, there remains a significant gap in understanding the moderating role of oil prices within the industrialization‐CO2 emissions relationship. This study is the first to investigate how industrialization interacts with oil prices to affect CO2 emissions across 30 African countries from 2000 to 2021, focusing on country‐specific heterogeneity. The results of Driscoll‐Kraay and IV‐GMM techniques suggest that industrialization drives CO2 emissions, while oil prices mitigate CO2 emissions in Africa. The results also show that economic growth (GDP) and urbanization stimulate CO2 emissions, while renewable energy and financial crises reduce it. The study's key findings report that oil prices moderate industrialization to reduce CO2 emissions in Africa. The heterogeneity analysis reveals that industrialization reduces CO2 emissions in top, upper‐middle and low‐industrialized countries. Oil prices reduce CO2 emissions in upper‐middle and low‐industrialized countries, while this relationship is insignificant in top industrialized countries. The findings also indicate that oil prices moderate industrialization to reduce CO2 emissions in upper‐middle industrialized countries, not top and low industrialization groups. Finally, findings from quantile regression suggest that the effects of oil price and industrialization on CO2 emissions are heterogeneous. Policymakers should promote green industries, invest in renewable energy infrastructure, and implement regulations that adhere to environmental standards.