Abstract
This study examines how economic, financial, trade, cultural and political globalisation—together with financialdevelopment, ICT diffusion and economic structure—shape energy diversification and environmental sustainability in theEU-26 sample over 1995–2023. A new Energy Diversification Index (EDI) is constructed and analysed jointly with CO2emissions using fixed-effects models, panel quantile regressions and System GMM to address persistence and endogeneity. Structural-break tests identify major regime shifts, and spatial econometric models capture cross-borderspillovers. Controls include GDP, industry share, remittances, ICT, FDI and CO2. Machine-learning models (Random Forest, XGBoost) and SHAP explainability provide non- linear and out-of-sample validation, while robustness checks confirm the stability of results. The findings show that economic and trade openness, financial globalisation, ICT diffusionand financial depth consistently raise diversification, whereas industry-intensive structures hinder it. Diversification strongly reduces emissions, with larger effects in high-emission countries. Spatial spillovers highlight the need for coordinated regional policy, supporting the objectives of the European Green Deal and REPowerEU.