Renewable energy policies and environmental sustainability: From policy ambition to capacity-led environmental gains

Global crises, climate change pressures, and increasing vulnerabilities in energy systems have intensified the need for policies that simultaneously enhance energy sustainability, strengthen energy security, and reduce environmental degradation. Despite the strategic role of renewable energy policies in this context, empirical evidence on the mechanisms by which these policies shape environmental and security outcomes remains limited, particularly in emerging economies. This study investigates how renewable energy capacity expansion and green finance jointly condition the effectiveness of renewable energy policies in improving environmental sustainability within a panel of 17 emerging economies from 2015 to 2022. Using Hayes’s (2022) PROCESS analytical framework, the findings indicate that renewable energy policies lack a direct effect on environmental indicators. Instead, their impact materializes indirectly through the expansion of renewable energy capacity, which enhances both environmental sustainability and long-term energy security. Furthermore, green finance strengthens the policy–capacity linkage, facilitating faster and more resilient renewable transitions during periods of economic or geopolitical instability. The study provides novel insights into the multifaceted pathways linking energy policy, energy security, and environmental sustainability, underscoring the importance of integrating renewable energy strategies with robust green financing frameworks to build climate-resilient and secure energy systems in emerging economies.