Does renewable energy modulate the negative effect of environmental issues on the socio-economic welfare?

The new sustainable development goals (SDGs) call for actions to close the gap between the protection of the environment and the socio-economic development. To shed light on the link among economy, society, and ecology, this study assesses the ability of renewable energy to moderate the effects of CO2 emissions on human development and economic growth for 31 transitional economies. Our findings substantiate that: (i) CO2 emissions have unconditional negative effects on human development and economic growth; (ii) the net impacts on human development and economic growth are positive from the interplay between renewable energy and CO2 emissions, i.e. renewable energy reduces the influences of per capita CO2 emissions on human development and economic growth; (iii) renewable energy interacts with CO2 intensity and CO2 emissions from liquid fuel consumption to negatively influence economic growth and human development. To dampen these net negative effects, corresponding renewable energy thresholds were computed and discussed. Theoretical and empirical contributions, implications to policymakers, and practitioners are also discussed. •Effect of renewable energy (RE) on environment, economic growth, and human development (HD) is examined.•CO2 emissions (CO) have unconditional negative effects on economic growth and HD.•RE complements CO2 emissions to enhance economic growth and inclusive human development.•RE interacts with CO from liquid fuel consumption and CO2 intensity to negatively affect economic growth.•RE interacts with CO from liquid fuel consumption and CO2 intensity to negatively affect HD.