Unveiling CO2 Emission Dynamics Under Innovation Drivers in the European Union

This study explores the complex relationship between innovation and carbon dioxide (CO2) emissions across the primary, secondary, and tertiary sectors within the 27 European Union (EU) member states over the period 2017–2023. Drawing on a comprehensive dataset and grounded in theoretical frameworks, the research investigates how different innovation indicators—including broadband penetration, digital skills, public and business R&D expenditure, ICT training, and SME-driven innovations—affect sectoral CO2 emissions. Using robust regression, the findings reveal a nuanced landscape: while ICT skills training, human resource mobility in science and technology, and SME business process innovations are associated with significant reductions in emissions, certain R&D investments and broadband penetration display positive correlations with emissions in specific service-oriented sectors. These results suggest that the environmental impacts of innovation are highly context-dependent and not uniformly positive. This study highlights the importance of strategically aligning innovation policies with sustainability objectives. Policymakers are encouraged to promote targeted digital training, support environmentally conscious R&D, and foster SME-led innovation practices. The results contribute to the growing discourse on sustainable innovation and provide actionable insights to advance the EU’s green transition.