Towards <scp>SDG</scp> 7 and <scp>SDG</scp> 13: How Environmental Policies and Renewable Energy Drive Low‐Carbon Growth in the Emerging‐Seven Nations

ABSTRACT Striking an equilibrium between swift economic expansion and ecological viability is a critical challenge for the E7 nations, which represent some of the world's most influential emerging economies. Achieving sustainable development requires these nations' industrialization to be coupled with a deep understanding of the factors that drive CO 2 emissions and affect ecological capacity. This study addresses this challenge by empirically examining the E7 countries, using two distinct models to explore the intricate relationships between economic growth, environmental policies, and sustainability. As a measure of environmental viability, the Load Capacity Factor (LCF) is an essential variable to investigate in the second model, whereas the first model seeks to determine what causes emissions of carbon dioxide, a sign of environmental degradation. As far as the models are concerned, the primary explanatory variables are the following: environmental policy stringency (EPS), renewable energy consumption (REC), and GDP (gross domestic product). Autoregressive distributed lag (ARDL), panel‐corrected standard errors (PCSE), feasible generalized least squares (FGLS), and Driscoll‐Kraay standard errors (DKSE) are some of the advanced econometric methods used in the study. These methods allow for the capture of both short‐run and long‐run dynamics during 1990–2022. The results show that GDP boosts CO 2 emissions in the short run, but in the long run, it shows an inverted U connection, which confirms the EKC theory. Stricter environmental regulations greatly improve ecological capacity, which EPS helps with, but their impact is larger on LCF improvement, which in turn helps to reduce emissions. According to the REC coefficient, the evolution to renewable energy in the E7 nations is still in its early stages, which can be characterized by higher emissions at times due to technical and infrastructure constraints, but ultimately leads to better sustainability results. GDP weakens the Load Capacity Curve (LCC) hypothesis, but EPS and REC strengthen it. These findings suggest that renewable energy sources and regulations regarding the environment must be changed to create a growth‐sustainability balance. The findings offer evidence‐based approaches to reduce CO 2 emissions and enhance ecological capacity in developing economies, influencing the seven member states' attempts to align their economic development goals with SDGs, predominantly SDG 13 and SDG 7.