Towards environmental sustainability in E−7 countries: Assessing the roles of natural resources, economic growth, country risk, and energy transition

Abstract

Achieving carbon neutrality and reducing global temperature rise below 2 °C necessitates shifting from conventional energy to renewable energy and ensuring sustainable use of natural resources. However, economic, political, and financial risks significantly impact renewable energy investments and natural resources' sustainable utilization. Thus, it is necessary to understand the roles of political, economic, and financial risk when assessing the impacts of natural resources, green energy use, and economic growth on pollutant emissions. In this context, the current study used panel data of emerging nations over the period from 1990 to 2018 and utilized some advanced econometric methodologies to assess the influence of green energy transition, economic growth, and natural resources on CO2 under the changing condition of political, economic, and financial risks. The outcomes revealed that natural resource rents enhance CO2 emissions while green energy use decreases CO2 emissions. Limiting political and financial risk lessens CO2 and boosts environmental quality. Besides, economic growth after reaching a high-level curbs CO2, and thus, the inverted U-shaped connection between economic growth and CO2 is found to be valid. The results of the Dumitrescu-Hurlin causality test unfold that changes in natural resources and energy transition can influence CO2 emissions. Also, country risk Granger causes energy transition. Given these results, comprehensive environmental and natural resources policies are directed to achieve environmental sustainability.