<p>This study adopts a two-dimensional perspective on structural change, encompassing not only supply-side changes but also demand-side changes in the structure of income distribution. The goal is to gain a deeper understanding of the environmental impacts of structural change in 37 developed and 50 developing countries, from 1990 to 2023. Furthermore, the study employs two nonparametric methods based on Local Linear Dummy Variable Estimates (LLDVE) and Kernel Regularized Least Squares (KRLS) to track the potential time-varying environmental impacts of both sides of structural change. The LLDVE and KRLS estimations yield heterogeneous results. An inverted U-curve is observed in developed countries when tracking the environmental impact of industrialization as an indicator of supply-side structural change, in contrast with developing countries. The results also reveal a paradox in the environmental impacts of income inequality as an indicator of demand-side structural change. While inequality leads to environmental degradation in developed countries, there is a clear trade-off in developing countries. To mitigate environmental degradation, developed countries must address income inequality. However, achieving this goal is more difficult in developing countries, which need to rethink their development paths to ensure that structural change policies, both the supply and demand sides, take environmental impacts into account.</p>