Fueling or Impeding the Green Shift? The Role of Energy Price Dynamics in Shaping Sustainable Industrialization (SDG 9)

As escalating energy prices challenge global efforts toward sustainable development, the intricate relationship between energy costs and industrial transformation stands at the forefront of economic and environmental policy debates. Against this backdrop, this study explores the impact of energy prices on sustainable industrialization in 32 OECD countries for the period of 2000–2021 by employing linear and non-linear models. Our findings indicate that energy prices are negatively associated with sustainable industrialization. Meanwhile, trade openness and economic development promote sustainable industrialization. Heterogeneity analysis indicates that developed and more open economies are better at utilizing and directing the resources towards industrial sustainability. Our findings further suggest that pursuing sustainable industrialization depends on a balanced policy strategy that incorporates energy prices in industrial and environmental settings. Policymakers should also promote the shift to renewable energy, use trade liberalization to support sustainable technology adoption, and redirect economic growth into innovation-based and sustainable industries. By addressing the challenges of rising energy prices while focusing on the favorable effects of trade and income, OECD countries can move toward a more stable and sustainable industrialization structure.