Renewable energy and the path to carbon neutrality: a data-driven study on sustainability impact

Purpose This study aims to investigate foreign investment’s mediating role in advancing sustainability transitions into carbon neutrality to promote the adoption of renewable technologies. This work also reveals the obstacles standing in the way of transitioning to renewable energy on a large scale, such as how expensive renewables tend to be upfront, the volatility of new tech solutions and the limitations of existing infrastructure. Design/methodology/approach This study was conducted through a structured survey of stakeholders in emerging economies, which examines the links among renewable energy penetration, foreign direct investment (FDI), sustainability and carbon neutrality. This study constructs a dataset from primary-source data obtained by surveying energy stakeholders (government representatives, regional power companies and environmental organizations), using the structured questionnaire. This approach was used to study the constructs of renewable energy adoption, FDI, sustainability and carbon neutrality along government policies. The authors received a total of 383 responses. The hypotheses being debated were empirically tested using statistical analysis on SPSS. Findings Findings suggest a positive effect of renewable energy uptake on sustainability and carbon neutrality, where FDI becomes an important factor only when supported by government policies. In addition, the mediating effect of FDI on sustainability is constrained in the absence of proper infrastructure and governance. The results highlight the necessity of differentiated policy frameworks to stimulate FDI and align with sustainability and carbon reduction targets. To better understand the dynamics of energy transitions, future research needs to focus on improving data, especially in terms of variables that cannot be derived from publicly available sources or do not allow for inter-temporal and international comparisons. Originality/value The research contributes in two ways. First, this work is an original and pertinent contribution to the academic literature, as it uses the diffusion of innovation theory for renewable energy transitions giving precise associations on factors that stimulate or block innovative technological systems. Second, it suggests practical policy and investor options by illuminating the respective roles of FDI versus government policies in facilitating renewable energy transition for broader sustainability goals.