Asymmetric effects of energy efficiency and renewable energy on carbon emissions of BRICS economies: evidence from nonlinear panel autoregressive distributed lag model.

Abstract

Embracing energy efficiency (EE) and renewable energy (RE) is essential for improving environmental quality. This research investigates the asymmetric impacts of EE, RE, and other factors on CO2 emissions in BRICS (i.e., Brazil, Russia, India, China, and South Africa) countries from 1990 to 2014. In contrast to previous studies, the present study considers EE as a major cause of CO2 emissions in BRICS countries. By using the new hidden panel cointegration and nonlinear panel autoregressive distributive lag model, this study is the first of its kind that unfolds the asymmetric links among EE, RE, and CO2 emissions. Findings clearly explain that the impact of the selected variables on CO2 emissions is asymmetric, and both EE and RE help to lower CO2 emissions in BRICS countries. In the long run, positive shocks in EE and RE can significantly mitigate CO2 emissions in BRICS economies. In particular, a 1% fluctuation in the positive sum of EE reduces CO2 emissions by 0.783% in the long run. On the other hand, a 1% fluctuation in the positive component of RE reduces CO2 emissions by 0.733%. Moreover, individual country estimates suggest the heterogeneous effects among BRICS countries. Based on the empirical findings, policymakers should consider the asymmetric behavior of the EE, RE, and economic growth while formulating, energy, environment, and growth policies of BRICS countries. Graphical abstract.