<p>Global rising developments to mitigate climate change and goals for sustainability are pushing economies to evolve, with carbon reduction strategies and circular economic innovation. This study explores how circular economy practices contribute to carbon emissions reduction, using annual data from 2000 to 2024. By employing autoregressive distributed lag technique to evaluate the short-run and long-run dynamics between carbon emissions and various economic indicators. Results show that gross domestic product (GDP) per capita and industrial value added contribute positively to greenhouse gasses emissions. In contrast, innovation in circular economy and renewable energy consumption positively contribute to carbon emissions. Results have concluded that GDP per capita and industrial value contribute positively to greenhouse gas emissions, while the circular economy innovation and renewable energy consumption significantly reduce emissions in both the short and long run. Specifically, a 1% rise in circular economy innovation has lowered emissions by approximately 0.74%, and a 1% increase in renewable energy use reduces emissions by 0.10% in the long run. These findings have underscored that advancing circular economy practices and renewable energy deployment are the cornerstones of Germany’s environmental policy framework and key drivers of its low-carbon transition.</p> Graphical abstract <p>Contrasting Effects of Circular Economy, Renewable Energy, and Industrial Growth on Germany’s Carbon Emissions (2000–2024)</p>