The Impact of Renewable Energy and Economic Complexity on Carbon Emissions in BRICS Countries under the EKC Scheme

Nuno Carlos Leitão,Daniel Balsalobre-Lorente,José María Cantos-Cantos

doi:10.3390/en14164908

Abstract

Economic complexity makes it possible to assess the development of the countries, the relations of innovation, and the differentiation of products. The article considers the links between the hypotheses of the Kuznets environmental curve and economic complexity using panel data for the group of BRICS countries (Brazil, Russia, India, China, and South Africa) from 1990 to 2015. As an econometric strategy, this study considered the panel fully modified least squares (FMOLS), panel dynamic least squares (DOLS), fixed effects (FE), and Panel Quantile Regression. The empirical results showed that economic complexity, income per capita, renewable energy, and carbon dioxide emissions are integrated with the first difference when applying the unit root test. The arguments of Pedroni and Kao cointegration tests were also used. According to these results, the variables used in this research are cointegrated in the long run. The results validated the arguments of the EKC hypothesis, i.e., the income per capita and squared income per capita are positively and negatively correlated with CO2 emissions. Moreover, economic complexity and renewable energy aim to improve environmental damage and climate change.

Highlights

The studies by Santana et al [1], Azevedo et al [2], Khattak et al [3], Ummalla and Goyari [4] assess an environmental Kuznets curve (EKC) for Brazil, Russia, India, China, and South Africa (BRICS), but it is noted that they did not introduce the impact of economic complexity on carbon dioxide emissions
The authors used the econometric strategy panel cointegration fully modified least squares (FMOLS)–Fully Modified Least Squares, DOLS–Dynamic Ordinary Least Squares, VECM– vector error correction model, Granger causality, and the results demonstrated that income per capita and squared income per capita are according to EKC hypotheses
This investigation assesses the relationships between economic growth, renewable energy, economic complexity, and carbon dioxide emissions applied to the BRICS group of countries (Brazil, Russia, India, China, and South Africa) for 1990–2015

Summary

Introduction

The studies by Santana et al [1], Azevedo et al [2], Khattak et al [3], Ummalla and Goyari [4] assess an environmental Kuznets curve (EKC) for Brazil, Russia, India, China, and South Africa (BRICS), but it is noted that they did not introduce the impact of economic complexity on carbon dioxide emissions. In this context, we observed a gap in the literature about the relationship between economic complexity and CO2 emissions as applied to the BRICS group of countries. BRICS present higher levels of economic development, which leads them to encourage environmental regulations and structural changes towards a cleaner industrial and tertiarization economy

Methods

Results

Conclusion