Unlocking the potential of renewable energy and natural resources for sustainable economic growth and carbon neutrality: A novel panel quantile regression approach

Abstract

As the world grapples with the dual challenge of fostering sustainable economic growth and achieving carbon neutrality, the role of renewable energy, urbanization, and financial development in shaping environmental outcomes in South Asian nations becomes increasingly critical. In this pioneering study, we delve into the heart of South Asia, encompassing a diverse range of nations – Afghanistan, Bangladesh, Bhutan, Pakistan, Sri Lanka, Nepal, the Maldives, and India – each chosen for their strategic geographical significance and the rich availability of pertinent data, offering a unique lens into the region’s energy and economic dynamics. This research uses panel quantile regression analysis to examine the relationship between the renewable energy consumption, broad money, urbanization, and natural resources and their effects on carbon emissions and economic development in South Asian (SAARC) nations. Fixed-effect panel quantile regression analysis was used to adjust for geographical variability. This study aims to investigate how urbanization, broad money, natural resources, and renewable energy affect economic growth and carbon emissions. According to our research, renewable energy consumption significantly and negatively affects CO2 emissions, especially in the distribution’s higher quantiles. Urbanization has a positive and significant effect on GDP, whereas natural resource rent has a positive impact on GDP and CO2 emissions. Broad money boosts GDP in the lower quantiles while having a negative impact in the higher quantiles. These findings show that in order to combine economic development with environmental sustainability, governments must concentrate on boosting the use of renewable energy sources and encouraging sustainable urbanization. Our policy implication is that policymakers should prioritize policies aimed at promoting renewable energy consumption and sustainable urbanization, which can help mitigate the negative environmental impact of economic growth in the SAARC region.