Escaping the Regional Carbon Trap: The Role of Renewable Energy Innovation in EU Decarbonisation

Abstract

The persistence of carbon‐intensive development pathways continues to hinder progress towards climate neutrality, especially in regions where industrial legacies, infrastructural inertia, and institutional rigidities reinforce emissions. This study examines whether renewable energy technologies innovation (RETI) can help European Union countries escape such regional carbon traps. Using panel data for 14 EU countries from 2000 to 2023, the analysis applies an extended STIRPAT framework with pooled OLS and quantile regression to capture heterogeneity across the emissions distribution. The results show that RETI has an uneven effect on greenhouse gas emissions. Although the average impact is modest, renewable innovation significantly reduces emissions in high‐emission contexts, with stronger effects at the upper quantiles. By contrast, its influence is weak in low‐emission contexts, suggesting transition frictions and uneven innovation pathways. Structural conditions remain central to emissions outcomes. Industrial composition and population consistently increase emissions, while manufacturing capital renewal reduces them, particularly in carbon‐intensive settings, highlighting the importance of replacing obsolete capital stock. Labour productivity, however, remains positively associated with emissions, indicating that productivity gains are still embedded in carbon‐intensive production systems. The findings also show that exchange‐rate dynamics weaken the emissions‐reducing effect of RETI, reflecting dependence on global supply chains and external macroeconomic conditions. Overall, decarbonisation is territorially uneven and structurally constrained. Renewable innovation can support transition, but only when combined with structural transformation, capital upgrading, and coherent institutional support.