Energy transition investments and carbon emissions: asymmetric and dynamic effects across developed and emerging economies

• ETIs reduce emissions asymmetrically over time and by investment direction • Positive shocks to ETIs cut emissions more than negative shocks reverse gains • Short-run and long-run effects differ, revealing policy timing implications • A new application of PNARDL captures dynamic, asymmetric investment impacts • Emissions decoupling patterns differ across developed and emerging economies. Achieving net-zero emissions is a central global challenge. While Energy Transition Investments (ETIs) are rising, their environmental effectiveness remains uncertain. This study examines the asymmetric impact of ETIs on carbon emissions across 32 major economies (2004–2023) using a Panel Nonlinear ARDL model. Results reveal that positive ETI shocks significantly reduce emissions, while negative shocks increase them less strongly. The Environmental Kuznets Curve is validated and extended to account for green investment flows. Tapio decoupling analysis further shows divergent transition paths between developed and emerging economies. Findings highlight the need for stable, long-term climate finance to sustain global decarbonization.