This study investigates the impact of economic freedom dimensions (government size ( \(GS\) ), open markets ( \(OPM\) ), regulatory efficiency ( \(RE\) ), and the rule of law ( \(RL\) )) alongside knowledge economy ( \(KE\) ) on environmental quality, measured by CO2 emissions, using panel data from 74 countries between 2003 and 2019. Within the Environmental Kuznets Curve (EKC) framework, the analysis explores both direct effects and interaction terms to assess how institutional and innovation factors influence emissions. The results show that \(GS\) , \(OPM\) , and \(RE\) significantly reduce CO2 emissions, while \(RL\) is associated with increased emissions, potentially due to its link with industrial expansion and energy demand. The inclusion of \(KE\) reveals its moderating role, where interactions with economic freedom dimensions (particularly government size) amplify the positive environmental effects. These findings highlight the importance of integrating knowledge economy dynamics into environmental policy and suggest that economic freedom, when aligned with innovation systems, can support sustainable development. The study provides new insights for policymakers aiming to balance economic growth with environmental stewardship through institutional and innovation-led reforms.
