Combining the effects of industrialization and oil prices on <scp>CO₂</scp> emissions: What role do renewable energy, urbanization and financial crisis play?

Abstract Transitioning to a low‐carbon economy is essential for sustainable development; however, there remains a significant gap in understanding the moderating role of oil prices within the industrialization‐CO 2 emissions relationship. This study is the first to investigate how industrialization interacts with oil prices to affect CO 2 emissions across 30 African countries from 2000 to 2021, focusing on country‐specific heterogeneity. The results of Driscoll‐Kraay and IV‐GMM techniques suggest that industrialization drives CO 2 emissions, while oil prices mitigate CO 2 emissions in Africa. The results also show that economic growth (GDP) and urbanization stimulate CO 2 emissions, while renewable energy and financial crises reduce it. The study's key findings report that oil prices moderate industrialization to reduce CO 2 emissions in Africa. The heterogeneity analysis reveals that industrialization reduces CO 2 emissions in top, upper‐middle and low‐industrialized countries. Oil prices reduce CO 2 emissions in upper‐middle and low‐industrialized countries, while this relationship is insignificant in top industrialized countries. The findings also indicate that oil prices moderate industrialization to reduce CO 2 emissions in upper‐middle industrialized countries, not top and low industrialization groups. Finally, findings from quantile regression suggest that the effects of oil price and industrialization on CO 2 emissions are heterogeneous. Policymakers should promote green industries, invest in renewable energy infrastructure, and implement regulations that adhere to environmental standards.