Carbon emissions mainly cause environmental devastation, and they’re continuously rising in the atmosphere. It is responsible for global warming, which causes severe climatic events, including high temperatures and uneven rain distribution. However, the increasing global population has generated a high demand for sustainable energy production and consumption. Therefore, for sustainable economic development, it is necessary to produce economic outputs with minimal environmental hazards. This study measures the total factor carbon emissions (CEE), consisting of input and two types of output (gross domestic output as the desired output and CO2 emissions as the undesired output), by utilizing complete data from 181 different economies for the period 1995-2022. Subsequently, it explores the dynamic relationship between the digital economy (DIGI), industrial structure (INDSI), population density (PD), and carbon emissions through the lens of the environmental Kuznets curve (EKC). Four econometric approaches were used to obtain robust findings to address the problems of heterogeneity, autocorrelation, and endogeneity. The outcomes revealed a significant positive impact of DIGI and INDSI and a negative impact of PD on carbon emissions. Moreover, INDSI significantly moderates the relationship between DIGI and CEE, increasing the positive environmental externality of DIGI. The findings also confirm the existence of the EKC, implying that CEE decreases with an increase in economic growth. After a certain level of economic growth, the CEE also started to increase. Therefore, both the DIGI and INDSI can significantly contribute to reducing carbon emissions, leading to a high CEE. Economies may adopt the incentive and award system, promote R&D in the industrial sector through the collaboration of academic and research institutions, and transform their structure along with the adoption of digital technologies to achieve the efficient use of energy and resources.