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As the International Energy Agency expects forecasts developing countries to become pollution hubs in the future, designing decarbonization blueprints has become critically important for the concerned governments. Hence, this study aims to identify the factors that can help developing nations in controlling their atmospheric discharges of carbon dioxide. Based on the rigorous econometric analysis, utilizing data from selected low- and middle-income nations, it is found that using energy productively and enhancing the share of renewable energy in the national energy consumption profiles can reduce carbon emissions. By contrast, urbanization exerts emission-boosting impacts while the corresponding impacts of financial development and international trade are inconclusive. Besides, the income group-specific analysis reveals heterogeneous outcomes as energy productivity improvement is found to decarbonize only the selected middle-income countries. However, the adoption of renewable energy exerts decarbonizing effects irrespective of the income group classification of the concerned developing nations. On the other hand, financial development hampers and promotes the decarbonization objectives of lower-middle-income and upper-middle-income countries, respectively. In addition, higher exports boost the emissions figures of low-income countries, in particular. Furthermore, urbanization is identified as a decarbonization-restricting factor for developing economies irrespective of their income group classifications. On the other hand, the outcomes from the regional and country-specific analyses also exhibit heterogeneity in the majority of the aspects. Considering these major findings, several decarbonization strategies are recommended. Introduction Following the worldwide resumption of economic activities after the COVID-19 pandemic, the global Carbon dioxide (CO2) emission level reached a record high of 36.3 gigatons in 2022, which was 6% greater than the emission level in 2020 (IEA, 2022). More alarmingly, the International Energy Agency (IEA) forecasts that in the next couple of decades, most of the CO2 discharged worldwide shall be originating in developing countries; assuming the developing nations to turn into a giant pollution hub. Consequently, the developing nations, in particular, are under the spotlight in respect of their compliance with the CO2 emission-inhibiting commitments that they made by signing the Paris Accord and the Sustainable Development Goals (SDG) agenda. In particular, the Paris Accord necessitates that developing countries in making nationally determined contributions for significantly abating their domestic CO2 emission levels so that the underlying objective of keeping the global temperature rise this year to below 2 °C, at least, above the pre-industrial level, can be realized (Meinshausen et al., 2022). On the other hand, the 13th goal of the SDG agenda (SDG-13 from hereafter), requires the developing countries to adopt CO2 emission-inhibiting policies so that climate change-related atrocities can be reduced while simultaneously building resilience against the associated environmental concerns (Mirza et al., 2022; Razzaq et al., 2023). In this regard, it is worth mentioning that most developing nations neither have the capacity nor the means to adopt relevant policies that can enable them to control their annual discharges of CO2 and embark on pathways relevant for achieving the Paris goals and the SDG agenda. Firstly, regarding the issue of low capacity, the developing countries have conventionally exhibited rigidity against phasing out fossil fuel dependency whereby it can be said that these underdeveloped economies are yet to build ample capacities in cleaning their energy portfolios (Sharma et al., 2021; Chopra et al., 2022). Besides, due to limited options for choosing alternative low-carbon fuels, the clean energy transition mechanism in these countries often get delayed. Moreover, s per the World Bank’s (2023) estimates, in 2015 renewable energy held a share of merely 22.02% in the final energy consumption profile of developing (i.e., low- and middle-income) countries combined, which is around 8 percentage points lower compared to the level in 2000. Hence, it is quite evident that instead of reducing fossil fuel reliance, the developing countries have rather become even more reliant on fossil fuels. The failure to phase out fossil fuel dependency and make a clean energy transition has not only hampered economic and environmental conditions, but it is has also triggered social adversities in the forms of poor human health, lack of job creation which could have resulted from the development of the clean energy sector, and so on. Secondly, in respect of insufficient means, it is often acknowledged in existing research works that the financial sectors in developing nations are not well-developed to sufficiently finance environmental welfare-improving initiatives (Banga, 2019). Consequently, developing nations need to look up to their developed counterparts for external financing of environment management and climate change resilience-building projects (Zhang et al., 2019; Sarkodie and Strezov, 2019). In this regard, it has been found that public climate finances and climate-related export credits from developed to developing nations have been growing steadily with time (OECD, 2018). Besides, the SDG agenda (especially the targets concerning SDG13) has also endorsed the need for the developed countries, that are parties to the United Nations Framework Convention on Climate Change, to annually mobilize $100 billion worth of green climate funds in order to finance the climate change-related initiatives of developing countries (Dalby, 2019). Moreover, the relatively less-developed states of financial sectors in developing nations, in comparison with those in the developed nations, are also assumed to withhold the production and consumption of renewable energy; consequently, the underdeveloped countries have no option other than relying on external finance for lessening fossil fuel dependency and promoting renewable energy adoption (Shahbaz et al., 2021). Furthermore, insufficient funds in these countries are also largely responsible for the lack of investments in technological development-related projects, especially those focusing on carbon capture and storage. Therefore, it is quite obvious that the aforementioned constraints have largely contributed to their failures of developing nations in addressing their traditional and ongoing environmental hardships. As a result, relieving these constraints is of paramount importance so that the quality of the environment in developing countries can be significantly improved in the future. In this regard, enhancing the Energy Productivity Rate (EPR) can be hypothesized as one of the potential mechanisms through which the developing nations' energy demand can be met while the associated energy-related discharges of CO2 can be contained, in tandem (Ramzan et al., 2022). In terms of the theoretical underpinnings, a rise in the EPR can be linked with lower employment of fossil fuels which, in turn, can momentarily assist in lessening fossil fuel dependency before developing nations can expand their renewable energy-generation capacities (Talan et al., 2023). Besides, in a recent report published by the IEA, it has been argued that EPR improvement “ reduces greenhouse gas emissions, both direct emissions from fossil fuel consumption and indirect emissions associated with electricity generation (IEA, 2019).” Thus, de-intensification of energy use is often regarded as a central factor that can enable developing nations to build climate change resilience (Aldieri et al., 2021). Apart from reducing fossil fuel dependency by boosting EPR, adopting renewable energy can be deemed important for improving the environmental state, especially in developing countries. Since most of the global net energy-importing nations belong to the cohort of developing countries, it can be said that these nations are traditionally fossil fuel dependent when it comes to meeting their energy needs (Ansari and Holz, 2020). Moreover, since these countries generate the bulk of their electricity outputs using both locally-extracted and externally-sourced oil, coal, and natural gas, it is no surprise that the majority of these countries find themselves in the worldwide list of top CO2-emitting countries. Thus, energy experts often recommend the fossil fuel-intensive power sectors in developing countries gradually to undergo a renewable transition by scaling their Renewable Energy Consumption (RENC) levels while simultaneously downsizing their fossil fuel employment levels (Dar and Asif, 2023). On the other hand, many previous works have also endorsed the environmental quality-influencing impacts exerted by the financial sectors in developing countries. However, these studies have asserted that the environmental repercussions linked with the development of the financial sector tend to vary; this is, the financial sector imposes equivocal impacts on environmental quality. Often, these studies argue that the negative consequences of financial development in developing countries are driven by their relatively less developed states of financial sectors compared with their developed counterparts. Thus, greening the financial development policies is hypothesized to enable developing countries to successfully tackle their environmental concerns. Against the backdrop of the importance of improving the environment, this study considers a sample of 74 developing countries1 for assessing the environmental effects of EPR improvement, RENC, financial development, and other major macroeconomic variables of concern. Precisely, the chosen country sample comprises 6 Low-Income Countries (LIC), 34 Lower-Middle-Income Countries (LMIC), and 34 Upper-Middle-Income Countries (UMIC) from 6 global regions. This study is of critical important from the point of view that the IEA has asserted that the rise in the global energy demand is likely to be spearheaded across emerging markets and developing countries across worldwide (IEA, 2021). Moreover, due to the persistently surging fossil fuel dependency in the majority of the developing nations, one can expect their CO2 emission figures to substantially increase in the future unless relevant emission-abating measures are taken. Accordingly, the findings from this study are expected to assist the selected developing countries in designing decarbonization blueprints and enabling them to keep their environmental pledges. Especially, these policies could help the selected developing nations in mitigating their respective CO2 emission levels so that the targets related to SDG-13 and the Paris Accord are fulfilled within the respective time frame. Two core contributions to the extant literature are offered through this study. First, though the energy use-environmental quality nexus is a well-researched issue, the previous works mostly scrutinized the environmental impact of rises in energy demand levels in developing countries (Xia et al., 2022). Hence, these studies have largely overlooked the issue of how efficient management of energy demand can influence the environmental quality. Nevertheless, it is pertinent to evaluate the environmental impact of EPR improvement because most developing countries are both fossil fuels dependent and net importers of fossil fuels. As a consequence, enhancing their energy consumption level for stimulating economic growth, in particular, is likely to degrade the environment. Hence, under such circumstances, improving the EPR can be thought of as a more relevant option for developing countries to overturn their environmental hardships. Accordingly, this void in the related literature is bridged by assessing the EPR-environmental quality relationship in the context of a large number of developing countries. Second, while several previous studies have utilized panel datasets of developing countries for predicting their environmental quality determinants (Farooq et al., 2022; Agozie et al., 2022), the majority of these studies have not explored whether the findings are homogeneous for developing countries of all income groups and regional distributions or not. Therefore, this study examines the environmental quality determinants separately for LIC, LMIC, and UMIC as well as for developing countries located in different parts of the globe. In the next section, a summary of the related empirical works documented in the extant literature is presented to further highlight the gaps this current study aims to bridge. Then, the empirical model considered for analytical purposes is discussed in the following section while the estimation strategy is presented in the next one. Subsequently, the findings are reported and discussed. Lastly, the concluding remarks are put forward along with relevant policy-level recommendations. Section snippets Review of the extant literature In the related literature on the macroeconomic determinants of environmental quality in developing countries, many proxies have been used to measure changes in the condition of the environment. These include CO2 emissions (Anwar et al., 2022), ecological footprints (Saqib et al., 2023), deforestation propensities (Aquilas et al., 2022), etc. However, given the significance of simultaneously achieving the climate pledges related to the Paris Accord and the SDG agenda, reducing CO2 emissions has Empirical modeling and data Considering the theoretical discussions presented in the previous section, the following model is considered for checking how improving EPR, scaling RENC, developing the financial sector, participating in international trade, and promoting urbanization affect CO2 emissions in the selected developing countries: l n C i t = α + β 1 l n E P i t + β 2 R E C i t + β 3 F D i t + β 4 X i t + β 5 M i t + β 6 U P G i t + ε i t In equation (1), the subscript i denotes the individual countries included in the sample of developing nations; the subscript t Econometric estimation strategy The econometric analysis is distributed across several stages. In the first stage, the Cross-sectional Dependency (CSDEP) analysis is conducted using the method introduced by Pesaran (2021). For each variable included in the empirical model, this method tests the null hypothesis of no CSDEP-related problem in the data. The associated outcomes shown in Table 2 certify that for both the full panel and the income group- and region-specific sub-panels, at least one of the variables exhibits the Empirical results and discussion The findings from the econometric analysis of unit root, cointegration, and regression are presented in this section. Firstly, the outcomes derived from Demetrescu and Hanck's (2012) unit root analysis are reported in Table 4. For the full panel as well as the income group-specific and regional sub-panels, it is found that the test statistics for all variables at their level and first differences are statistically insignificant and significant, respectively. Hence, it can be asserted that the Conclusion and policy recommendations Since the IEA expects developing countries to become major pollution hubs in the future, designing decarbonization blueprints has become an agenda of utmost importance for the concerned governments. Hence, this study identified the factors that can help developing nations, located worldwide, in controlling their annual discharges of CO2 so that these nations can decouple their economic growth performances from environmental degradation. Based on the overall findings, it was found that Ethical approval Not applicable. Consent to participate Not applicable. Consent to publish Not applicable. Authors’ contributions Chen Yan: Writing - Review & Editing; Data curation; Visualization; Software. Muntasir Murshed: Writing - Original Draft; Conceptualization; Formal analysis; Visualization; Supervision; Methodology; Software; Writing - Review & Editing. Ilhan Ozturk: Writing - Original Draft; Formal analysis; Investigation; Writing - Review & Editing. Abu Bakkar Siddik: Writing - Review & Editing; Formal analysis. Wafa Ghardallou: Writing - Review & Editing; Formal analysis; Validation. Khurshid Khudoykulov: Writing Declaration of competing interest The authors declare that they have no competing interests . Acknowledgments Princess Nourah bint Abdulrahman University Researchers Supporting Project number ( PNURSP2023R261 ), Princess Nourah bint Abdulrahman University , Riyadh, Saudi Arabia. The Key Project of the National Social Science Foundation of China (Grant No. 20AJY015 ), the Fundamental Research Funds for the Central Universities (Grant No. 300102341667 ), and the Innovation Capability Support Program of Shaanxi (Grant No. 2022KRM145 ). References (82) T.S. Adebayo et al. The influence of renewable energy usage on consumption-based carbon emissions in MINT economies Heliyon (2022) D.Q. Agozie et al. 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