Decoding the Relationship Between Economic Growth and Climate Change in Selected G7 Countries: A Multi‐Factor Analysis for Sustainable Development

ABSTRACT

The current study examines the impact of economic growth, urbanization, trade openness, and energy consumption on climate change among four G7 countries: the United States of America (USA), the United Kingdom (UK), Japan, and Germany. For this, the Auto Regressive Distributed Lag (ARDL) model was used, and to assess the model's fitness, several machine learning algorithms were also employed, including Random Forest and Gradient Boost. Based on the coefficients of determination ( R ² ), the model is well‐fitted. The ARDL model's results show that in the long run, energy consumption increases CO ₂ emissions by 0.46%, 0.84%, 1.7%, and 0.7% in Japan, the UK, the US, and Germany, respectively. In the case of GDP, a negative relationship with CO ₂ emissions was observed in the UK and Germany, at rates of 0.60% and 1.06%, respectively. In contrast, a positive relationship was found in the USA, at a rate of 0.42%. Trade openness has shown a positive relation with CO ₂ emissions in both Japan and the USA. Urbanization has also demonstrated a positive association with CO ₂ emissions in the UK and the USA, while it has shown a negative association in Japan by 0.007%. All four countries need to invest more in clean energy to improve the current climate, or at the very least, stabilize it.