In the face of growing threats from global warming and climate change, developing effective policy tools to achieve sustainable development goals has become a top priority around the world. The efforts of G7 countries—some of the world’s largest economies—to reduce carbon emissions play a key role in shaping global environmental policies. To reduce CO₂ emissions while still growing their economies, countries are turning to environmental taxes, green technology innovation, and sustainable urban planning as the most promising solutions. This study aims to examine the effects of environmental taxes, green innovation, and urbanization on per capita CO₂ emissions in G7 countries between 1990 and 2023. Using a balanced panel data set and a fixed effects estimation method, the analysis explores whether these factors help reduce or increase environmental pressure. The findings show that environmental taxes significantly reduce CO₂ emissions. Similarly, green innovation—measured by the number of environmental patents—also helps lower emissions. Urbanization is also found to reduce emissions, likely due to better infrastructure and more efficient energy use in urban areas. The results suggest that policymakers should design and apply environmental taxes in a gradual, effective, and targeted way. Also, encouraging green innovation together with smart urban policies can be very important in reducing CO₂ emissions.