Determinants of SDG7 Progress in E7 Economies: Financial Development, Tax Burden, Trade Openness, and Technological Innovation

Low‐carbon energy consumption plays a critical role in reducing greenhouse gas emissions to combat climate change, while also being closely linked to macroeconomic dynamics such as financial development, technological innovation, trade openness, and economic growth. In this context, factors such as tax burden, the depth of the financial system, and the level of openness stand out as key determinants that either encourage or hinder the transition to low‐carbon energy. This study investigates the effects of financial development, tax burden, technological innovation, trade openness, and economic growth on low‐carbon energy consumption in E7 economies (Brazil, China, India, Indonesia, Mexico, Russia, and Türkiye) during the period 1995–2024. The analysis utilizes second‐generation panel data methods and applies the augmented mean group (AMG) and regularized common correlated effects (RCCE) estimators to identify long‐run relationships. The empirical findings reveal several strong country‐specific effects. Financial development positively impacts low‐carbon energy consumption in Mexico, while negatively impacting it in Indonesia and Russia. Economic growth is found to promote low‐carbon energy consumption in China, Indonesia, and Russia. Technological innovation negatively impacts low‐carbon energy consumption in Mexico. Trade openness positively impacts low‐carbon energy consumption in Mexico. Finally, tax burden negatively impacts low‐carbon energy consumption in Türkiye. Based on these findings, it appears essential to align financial, fiscal, and trade‐related policies with low‐carbon energy targets to accelerate the energy transition in E7 countries.