Abstract
This study examines whether the Environmental Kuznets Curve (EKC) hypothesis adequately explains the relationship between economic growth and environmental degradation when key structural factors are taken into account. Using panel data for 15 middle-income and 15 high-income countries over the period 1990-2023, the analysis incorporates primary energy consumption, renewable energy use, and population growth into the traditional EKC framework to better capture the drivers of CO₂ emissions. Methodologically, the study employs panel econometric techniques that address cross-sectional dependence and heterogeneity, including appropriate unit root and cointegration tests, followed by long-run estimation and causality analysis. The findings indicate that in middle-income countries, CO₂ emissions are primarily driven by rising energy consumption and population growth, while renewable energy plays a mitigating role; income does not exhibit a significant long-run impact. In high-income countries, primary energy use increases emissions whereas renewable energy reduces them, while GDP and population growth remain insignificant. Causality analysis reveals strong bidirectional relationships between emissions and energy-related variables in both income groups. Overall, the study concludes that energy composition is more influential than income in determining environmental outcomes. These results highlight the importance of accelerating the transition to renewable energy as a central policy priority for reducing emissions across different stages of economic development.