Navigating the Sustainability Paradox: Technology, Regulation, and Clean Energy Pathways in OECD Economies

Achieving sustainable development in advanced economies requires balancing infrastructure growth and technological innovation with ecological responsibility. This study examines 27 OECD countries from 2000 to 2022 to explore how next‐generation technologies, infrastructure expansion, and regulatory frameworks shape environmental sustainability (ES) in the context of the Sustainable Development Goals (SDGs). Using an advanced econometric strategy that combines the Method of Moments Quantile Regression (MMQR), Common Correlated Effects Mean Group (CCEMG), and Cross‐Sectional Autoregressive Distributed Lag (CS‐ARDL) models, the analysis captures both heterogeneous distributional effects and long‐run dynamics. The findings reveal a nonlinear relationship in which competitive industrial performance (CIP) initially supports ES but becomes detrimental at higher levels, emphasizing trade‐offs between industrial growth and ecological balance. Artificial intelligence (AI) and information and communication technologies (ICT) show negative effects at higher quantiles of ES, indicating rebound effects from rapid technological diffusion. However, robustness checks confirm their potential to improve energy efficiency and environmental monitoring over time. In contrast, geothermal energy (GE), natural resource rents (NRR), environmental regulations (ER), and human capital (HC) significantly enhance sustainability outcomes, with ER and HC proving crucial in building resilience during crises such as COVID‐19. These results highlight the importance of strengthening regulatory institutions, prioritizing clean energy investments, and fostering human capital to ensure that technological progress and infrastructure transitions act as drivers of sustainable development rather than sources of ecological strain.