Historically, Algeria’s industry has significantly driven the country’s economic growth but has also become a notable contributor to carbon dioxide emissions. In an era where climate change threatens our world, understanding the role of sustainable economic development in mitigating environmental impacts is paramount. This study investigates the efficacy of sustainable economic development strategies in reducing CO2 emissions within Algeria’s industrial sector. Utilising an autoregressive distributed lag (ARDL) model to analyse data spanning 1990 to 2021, we explore the dynamic relationship between GDP per capita, industry value added, energy consumption, labour productivity, exports, and CO2 emissions. Our findings reveal that sustainable economic practices significantly reduce CO2 emissions in both the short and long term. The results advocate for a redefined approach to industrial policies, emphasising the potential of sustainable economic strategies to achieve a balance between economic growth and environmental preservation in Algeria and similar contexts globally.