Promoting green economic growth: The role of renewable energy, energy efficiency, environmental regulation, and governance in the G7 countries

Political considerations are becoming increasingly important in ensuring sustainable growth. This research has studied the roles of renewable energy consumption, energy efficiency, government effectiveness, and environmental regulation in fostering green economic growth in the G7 countries from 2000 to 2021. Using a Panel Autoregressive Distributed Lag (Panel ARDL) model, we employ three robust estimation techniques, Common Correlated Effects Mean Group (CCEMG), Augmented Mean Group (AMG), and Driscoll-Kraay Standard Errors (DKSE) to address challenges related to cross-sectional dependence and slope homogeneity. The major results confirm that, in the long run, increases in renewable energy use, improvements in energy efficiency, institutional effectiveness, and stringent environmental regulation significantly promote green economic growth. In contrast, short-run dynamics reveal transitional disruptions, particularly from renewable energy integration, efficiency restructuring, and regulatory compliance, that temporarily dampen output before convergence to equilibrium. Furthermore, country-specific AMG estimations reveal both convergence and divergence in policy impacts, underscoring the importance of national contexts in shaping green transition outcomes. These findings underscore the importance of cohesive, forward-looking policy frameworks that align economic and environmental priorities. By strategically integrating governance quality, targeted investment, and regulatory innovation, advanced economies can navigate transitional challenges while steering toward long-term green growth. Such integrated strategies are essential not only for mitigating adjustment costs but also for sustaining inclusive, resilient, and low-carbon development trajectories. • Renewable energy consumption and energy efficiency significantly promote green economic growth. • Government effectiveness and stringent environmental regulation strongly enhance sustainability outcomes. • Panel ARDL results confirm stable long-run cointegration among institutional and energy variables. • Short-run disruptions from energy transitions converge toward long-run environmental and economic gains. • Country-specific AMG estimates reveal heterogeneous policy impacts across G7 economies.