Transforming renewable energy markets to accelerate carbon emission reduction

This study examines how renewable energy market development influences carbon dioxide (CO2) emissions across 18 countries in Europe and Asia from 2015 to 2024. It evaluates whether structural reforms, policy interventions, and technological innovations in the renewable energy sector (RES) accelerate national decarbonization. We employ an environmental Kuznets curve (EKC)-consistent fixed-effect panel model, embedding a difference-in-differences (DiD) design to identify policy-induced deviations from the income–emissions trajectory. Quantile-based EKC estimates facilitate complementary robustness analysis to explore distributional heterogeneity. The results indicate that countries adopting renewable energy support measures reduce CO2 emissions by approximately 8.5% relative to a control group. Renewable energy market development (LnRENO) is measured as the logarithm of the renewable energy share in total final energy consumption, while CO2 emissions are measured in logarithmic per capita terms. The coefficient for LnRENO is −1.311 (p 0.01), confirming an inverse relationship between renewable energy market development and emissions. Economically, this implies that a 1% increase in the renewable energy share is associated with approximately a 1.3% reduction in per capita CO2 emissions, holding other factors constant. The analysis further validates the environmental Kuznets curve (EKC): income growth initially raises emissions, but beyond a threshold, higher income combined with technological advancement leads to emission reductions. This is reflected in the coefficients for LnINC (82.02) and LnINC2 (−41.5), both significant at p 0.01. The findings show that policy for RES market development can facilitate decarbonization, particularly in institutionally mature economies, while highlighting limits to policy effectiveness in fossil-dependent contexts.