On the Road to Net‐Zero Emissions: Empirical Evidence on the Drivers of Carbon Mitigation

Net‐zero emission targets have become a central policy framework shaping environmental regulation, energy transitions, and institutional design. This study investigates whether governance quality, renewable energy consumption, environmental taxes, and economic growth effectively reduce carbon emissions under binding net‐zero policy regimes, focusing on 39 countries with legally adopted or officially declared net‐zero targets. Using annual data for 2002–2020, second‐generation heterogeneous panel data techniques are applied, including the Common Correlated Effects (CCE) estimator, to account for cross‐sectional dependence. The results show that renewable energy consumption and governance quality significantly reduce carbon emissions, while environmental taxes do not exhibit a robust long‐run effect. In contrast, economic growth is associated with higher emission levels. These findings indicate that effective decarbonization under net‐zero commitments depends not only on energy substitution or fiscal instruments, but also on institutional capacity and governance structures that strengthen policy credibility.