Decarbonizing global value chains: The mediating role of economic upgrading in renewable energy transitions

This study examines the interrelation between economic upgrading, renewable energy consumption and carbon emission within Global Value Chains (GVCs), by using the data of 28 emerging countries from 2001 to 2022. The study supports the argument that renewable energy consumption decreases the CO2 emissions within GVCs. The study analyzed the vital role of renewable energy to make worldwide production procedures carbon-free and reducing the environmental challenges of Global Value Chains. This study also shows that the relation between renewable energy consumption and carbon emissions within GVC is not straightforward, while economic upgrading plays a role of an important mediator in this interrelation. Economic upgrading plays a significant role of mediator which reveals the complexity of the interaction among renewable energy and GVC carbon emissions. It shows that renewable energy is a crucial factor to reduce carbon emissions, but the careful management of the process of economic upgrading is also necessary to avoid the short-term environmental damage. The findings offer unique and valuable insights for policymakers to promote economic upgrading, particularly in emerging countries. The study suggests that these countries should facilitate the advanced energy-efficient technologies and ensure the adoption of sustainable practices in industries, while upgrading their production processes.