Can Green Technology and Renewable Energy Drive Carbon Neutrality in CAREC Nations? Evidence From Financial Development and Sustainable Growth

This study explores how financial development (FD), renewable energy consumption (REC), and green technology (GRT) influence carbon emissions (CEs) in CAREC (Central Asia Regional Economic Cooperation) economies from 1996 to 2023. Using method of moments quantile regression (MMQR) and Panel‐Corrected Standard Errors (PCSE), the analysis captures heterogeneous and nonlinear effects across different emissions levels, offering a more detailed understanding of the sustainability transition in the region. The findings show that increased renewable energy use consistently lowers emissions, supporting progress toward SDG 7 (Affordable and Clean Energy) and SDG 13 (Climate Action). GRT adoption also contributes to reducing emissions, although its effectiveness varies depending on national technological capacity and policy support. The impact of FD is mixed and depends on the emissions scale. In several quantiles, FD promotes cleaner production by enabling financing for renewable projects and technological upgrades. However, in higher‐emission contexts, financial expansion appears to support carbon‐intensive industries, increasing environmental pressure where fossil dependence remains strong. Trade openness demonstrates a positive correlation with CE, indicating that without environmental safeguards, economic integration may amplify ecological degradation. This underscores the need for coordinated sustainability frameworks across CAREC economies. Overall, the study expands the evidence base on carbon mitigation pathways in emerging regional blocs. Policy implications highlight the need to scale renewable energy infrastructure, accelerate technological upgrading, and direct financial flows toward low‐carbon sectors. Strengthening regulatory and institutional mechanisms will be essential to ensure that economic growth aligns with long‐term environmental goals in the CAREC region.