Digital Pathways to a Greener Europe: The Role of <scp>ICT</scp> and Renewable Energy in Reducing Carbon Emissions

ABSTRACT This study investigates the key drivers of carbon emission in the European Union, focusing on renewable energy pathways, the digital economy, fossil fuel consumption, information and communication technologies, and economic progress. Using panel data for 25 EU member states from 2000 to 2023, the analysis employs second‐generation econometric techniques, including cross‐sectional dependence tests, Westerlund cointegration, and PCSE, AMG, and DCCE estimators to address heterogeneity and cross‐country interdependence. The results show that renewable energy expansion, digital economy, ICT advancement, and economic progress significantly reduce carbon emission, whereas fossil fuel consumption increases it. Robustness checks confirm the stability of these findings, while causality analysis reveals bi‐directional relationships between economic progress and carbon emissions, as well as between fossil fuel consumption and carbon emissions, while unidirectional causality runs from renewable energy pathways, the digital economy, and information and communication technologies toward carbon emissions. The study underscores the importance of renewable energy adoption, digital transformation, and technological innovation for improving environmental outcomes in the EU, while highlighting fossil fuel dependence as a persistent challenge. By extending Ecological Modernization Theory, the findings offer policy‐relevant insights to support the EU's climate neutrality and sustainable development objectives.