The world’s energy systems have been critical in the face of the growing threat of climate change. The energy transition progress proved unsuccessful at COP27, while COP28 provided an opportunity to question whether energy systems need a revolution to avoid climate disasters and attain carbon neutrality goals. In this regard, the present study aims to explore whether structural changes in the energy sector can help nations achieve carbon neutrality. For this purpose, we empirically analyze the impact of both non-renewable and renewable energy sources on CO₂ emissions and carbon intensity of energy. Specifically, we targeted the top five climate-laggard economies—that is, New Zealand, Australia, the Philippines, Mexico, and Indonesia—which are making efforts toward carbon neutrality but are lagging in the COP28 race due to their high reliance on fossil fuels in their total energy mix. We employed the Cross-Sectionally Augmented Auto-Regressive Distributed Lag (CS-ARDL) model on data collected from 1990 to 2022 to examine the findings empirically. The findings of this research showed that non-renewable energy sources are likely to lead to higher emissions of CO₂ and higher carbon intensity. On the other hand, renewable energy negatively affects both CO₂ emissions and carbon intensity. Thus, the results obtained in this study indicate that renewable energy adoption plays a crucial role for countries intending to achieve the goals set at COP28 and advance their efforts toward carbon neutrality.