The pressing and critical nature of the challenges presented by climate change underscores the need to understand key drivers of transition to clean energy, as well as track progress in greenhouse gas emissions reductions towards environmental sustainability. This research explores the link among efficient management of resources, energy shift, cost incurred on technological innovation, economic prosperity, environmental destruction in SAARC Countries over a period from 1991 to 2024. By conducting the rigorous econometric analysis of cointegration, GMM and MM-QR, we show that economic development, environmental innovation, renewable energy and environmental compliance promote the process of energy transition. However, reliance on fossil fuels and environmental degradation are hurdles in the path of this process. Our results suggest that alternative energy development should be one of the priority proposals in the industrial countries. They also should provide financial incentives for renewable and environmental technology to gradually substitute for fossil fuels in a systematic way. Moreover, this study provides a detailed analysis and discussion of the policy instruments. Graphical abstract The alternative text for this image may have been generated using AI.