From Policy to Progress: How Stringent Environmental Policies Drive Global Energy Transitions

In pursuit of global climate goals and sustainable development, countries have adopted a wide range of environmental policy instruments. This study examines the relationship between environmental policy stringency (EPS) and environmental outcomes, measured by carbon intensity (CI) and renewable energy intensity (REI), in 16 G20 countries from 1990 to 2020. The empirical findings reveal that more stringent environmental policy is a significant predictor of reduced CI and increased REI, although effects vary by policy type, time horizon, and country group. A novel sub-index-level analysis reveals that market-based incentive instruments, particularly trading schemes on CO2 emissions and renewable energy, as well as technology support instruments, particularly wind and solar initiatives, exhibit the strongest and most robust effects. Emerging economies generally display greater responsiveness to policy interventions than advanced economies. By identifying which specific policy instruments are most effective across different development contexts, this study provides actionable insights for designing targeted climate policies that support both energy transition and sustainable development pathways.