International trade diversification, green innovation, and consumption-based carbon emissions: The role of renewable energy for sustainable development in BRICST countries

Abstract

Environmental sustainability is the most crucial concern of the world. The existing literature has documented various factors that can play a remedial role in fixing the gregarious carbon emissions issue; however, little is known regarding consumption-based emissions. Trade diversification is one of the potential remedies for carbon emission reduction, enhancing economic growth and reducing trade risk and volatility by structural changes in critical production and development. Similarly, green innovation accelerates energy efficiency and improves environmental quality. However, in previous studies, trade diversification and green innovation have not received sufficient attention regarding emerging economies. Therefore, this study evaluates the impact of trade diversification, green innovation, and renewable energy on carbon emissions in BRICST countries (Brazil, Russian Federation, India, China, South Africa, and Turkey) from 1995 to 2020. The advanced panel data estimates empirically proved the existence of cointegration among the study variables. The long-run and short-run outcomes of the cross-sectionally augmented autoregressive distributed lag (CS-ARDL) model revealed that trade diversification, green innovation, and renewable energy are negatively associated with carbon emissions. Thus it has been proven that the trade baskets of these countries have a high number of eco-friendly products, and their manufacturing technologies are transforming toward green technologies, promoting renewable energy consumption to abate consumption-based carbon emissions. In contrast, the economic growth in this specific economic bloc amplifies environmental degradation by increasing the consumption-based carbon emission. In terms of policy implementation, this study suggests adopting harmonic trade policies, trade synchronization, and expansion of green innovations investment to reduce the current carbon emission level.