SMART URBANIZATION, CLEAN ENERGY TRANSITION, AND CO₂ EMISSIONS: DYNAMIC EVIDENCE FROM OECD ECONOMIES

Abstract

Rapid urban transformation and digital intensification are reshaping environmental outcomes in advanced economies. This study examines the environmental implications of smart urbanization by analysing the roles of Information and Communication Technologies (ICT), clean energy transition, and forest cover in shaping carbon emissions across OECD economies over the period 1995-2024. Guided by an extended STIRPAT framework, the analysis employs Cross-Sectionally Augmented Autoregressive Distributed Lag (CS-ARDL) models to capture dynamic relationships while accounting for cross-sectional dependence and heterogeneity. Robustness is assessed using Fixed-Effects regressions with Driscoll-Kraay (FE-DK) standard errors. The results indicate that economic growth is decoupled from carbon emissions in OECD countries and that urbanization does not exert a uniform direct effect on emissions. Instead, its environmental impact is conditional on accompanying energy systems. Clean energy transition significantly moderates the emissions pressures associated with urban expansion, highlighting the importance of integrating renewable energy deployment within urban environments. In contrast, ICT development and forest cover exhibit weak and heterogeneous macro-level effects. Overall, the findings underscore the importance of coordinated urban and energy policies for advancing climate-compatible urban development in advanced economies.