Do Natural Resource Rents and Renewable Energy Consumption Shape Carbon Emissions? Nonlinear Evidence From G7 Countries Using PSTR and Wild Cluster Bootstrap

This study provides new evidence on the complex relationship between Natural Resource Rents (NRR), Renewable Energy Consumption (REC), and CO 2 emissions by emphasising the nonlinear role of Economic Growth (EG), a key determinant of both economic development and environmental pressure. Using the Panel Smooth Transition Regression (PSTR) model together with the Wild Cluster Bootstrap (WCB) method, the analysis examines G7 countries over the period 1990–2023. The findings reveal significant regime‐dependent dynamics in the growth–environment nexus. Specifically, EG exerts a positive effect on CO 2 emissions at lower income levels, but this effect weakens as income rises, indicating a gradual decoupling of EG from environmental degradation in advanced stages of development. NRR significantly increases emissions, with the effect becoming stronger once EG exceeds the estimated threshold, thereby highlighting the environmental vulnerability associated with resource dependence. In contrast, REC and urbanisation consistently reduce CO 2 emissions across regimes, with stronger mitigating effects observed at higher levels of EG, emphasising the importance of renewable energy adoption and sustainable urban development. Trade openness, however, contributes positively to emissions, and its impact intensifies with economic expansion, suggesting that growing trade activities may increase environmental pressures. Finally, the results confirm the heterogeneous and nonlinear nature of the relationships among EG, resource utilisation, energy transition, and environmental quality. The study suggests that G7 economies should strengthen renewable energy investment, promote sustainable urban infrastructure, encourage environmentally friendly trade practices, and implement stricter resource management policies to achieve long‐term EG alongside environmental sustainability.