Green Energy Is Not Always Green: An Analysis of Renewable Energy, Economic Growth, and CO 2 Emissions in Developing Countries

ABSTRACT In an effort to reduce carbon emissions and move toward a sustainable economy, developing countries are adopting various mechanisms, including promoting renewable energy consumption. However, whether renewable energy consumption is truly green and how it impacts growth remains debatable. Using a sample of 98 developing countries from 2002 to 2021, this paper explores the impact of renewable energy on carbon dioxide (CO 2 ) emissions and economic growth. This research uses the fixed‐effects, 2SLS, system‐GMM, and Hayes Process Model 4 methods and makes several key findings. First, renewable energy consumption is found to have a positive effect on economic growth. Second, while renewable energy consumption directly reduces CO 2 emissions, it paradoxically contributes to an indirect rise in CO 2 emissions by stimulating economic growth. The total effect of renewable energy consumption on CO 2 emissions is negative in developing countries. These findings suggest that renewable energy, though often considered a clean alternative, has complex implications for environmental and economic dynamics in developing nations. Therefore, this study provides important policy implications for developing countries to adopt appropriate policies to achieve sustainable growth goals.