Moving towards sustainable environmental development for BRICS: Investigating the asymmetric effect of natural resources on CO2

Abstract

AbstractEnvironmental sustainability has become the most critical global agenda of the 21st century. The Paris Agreement goals to keep the global temperature rise below 2 compared to the pre‐industrial period. BRICS, which use intensive natural resources, hold regular meetings, and announce policies to comply with the Paris Agreement. This article aims to help BRICS achieve their sustainable development goals. In order to achieve this aim, the relationship between renewable energy consumption, natural resources, and CO2 emissions is explored in depth using the non‐linear panel autoregressive distributed lag method controlling for economic growth and foreign direct investments. Robust results are obtained by allowing for heterogeneity and cross‐section dependence in econometric analysis. Contrary to the previous literature, it has been shown in the empirical analysis that the impact of natural resources on CO2 emissions is not the same in both the long and short‐run. In the long‐run, negative and positive changes in natural resources increase environmental degradation, while foreign direct investments improve environmental quality. In addition, it seems that renewable energy sources have not reached the level to enhance environmental quality. The empirical results indicated that natural resource and renewable energy consumption findings are novel and bring a different perspective to the existing literature. BRICS should take measures to ensure sustainable use of natural resources in order to minimize dependence on fossil fuels. China, Russia, India, and South Africa should increase the share of RSE in the total energy mix and support renewable energy infrastructure investments for moving towards sustainable environmental development.