Climate change and environmental degradation pose serious threats to socio-economic and ecological development. Global economies enforce strict environmental regulations and renewable energy transition policies to address climate vulnerability. Therefore, this study aimed to explore the moderating role of environmental policy stringency (EPS) on the relationship between energy transition (ET) and carbon dioxide (CO2) emissions from energy. The present study also aims to examine the effects of energy transition and environmental stringency policies on CO2 emissions from energy. For this purpose, this study utilized a cross-sectional autoregressive distributional lag approach on panel data (1995-2020) from 38 world economies. Moreover, two econometric techniques, augmented mean group (AMG) and common correlated effects mean group (CCEMG), were used for the robustness checks. The findings revealed that ET and EPS have significant and negative individual impacts on CO2 emissions. Similarly, EPS also plays a strong moderating role in the relationship between ET and CO2 emission. This implies that EPS can boost ET, which plays a crucial role in lowering CO2 emissions and improving environmental quality. Policymakers should support investment in renewable energy transitions, offer fiscal incentives to the sector, and nurture competitive market structures that provide policy direction and expectations for the renewed energy business.