Core Pathway to Net Zero: Dissecting the Non‐Linear Dynamics Between Clean Energy Investments and Carbon Budget

ABSTRACT Motivation: The climate crisis stands as the defining moral and intellectual dilemma of our age. Misguided clean‐energy investments expose the fragility of the energy–carbon equilibrium, demanding analysis, ethical foresight and institutional resolve to preserve our ecological inheritance. Purpose: This study examines the dynamic impact of energy investment on the carbon budget across 28 developed and 37 developing countries, using assembled annual data from 2000 to 2024. Design/methodology/approach: The empirical strategy is framed in time series and dynamic econometric analysis. Findings: The results indicate a concave relationship between clean‐energy investment and carbon budgets, where a 1% increase in clean‐energy investment lowers carbon budgets by approximately 2.6% in developing economies and 2.1% in developed economies, with diminishing marginal returns. Nonlinear effects and strong persistence in historical carbon trajectories jointly shape the current effectiveness of investments across both groups. Research limitations/implications: The study focuses on developed and developing economies, which limits the detail on individual countries but enhances cross‐regional understanding. Originality/value: The study makes a significant contribution to the existing literature by demonstrating that clean‐energy investment yields larger marginal carbon reductions in developing economies, implying higher global mitigation efficiency.