Assessing the role of energy efficiency, environmental policy stringency, and green energy for achieving carbon neutrality goals in BRICS economies

Abstract

The role of energy efficiency is frequently portrayed as the most prominent tool for achieving carbon neutrality and sustainable development goals. Thus, the present study is intended to explore the dynamic role of energy efficiency, green energy, green technology, and environmental policy stringency for achieving carbon neutrality goals in the presence of other variables, such as economic growth. A series of advanced econometric techniques, including a cross-sectional dependence test, a second generation unit, a joint correlated effect-mean group (CCE-MG), and an augmented mean group (AMG), were adopted to assess the panel data from 1990 to 2020 empirically. The initial finding indicates the existence of cross-sectional dependence, data stationarity, slope heterogeneity, and panel co-integration among the variables. Lastly, based on the nature of the panel data as cross-section dependence in the data, CS-ARDL was preferred over traditional econometric techniques. Additionally, the CS-ARDL more efficiently tackles the unobserved elements and heterogeneity across the cross sections. Findings exhibited that energy efficiency, green energy, and environmental policy stringency are promising factors for addressing the growing carbon emission problems. Moreover, we also applied non-linear ARDL, and the finding revealed that a one percent positive change in energy efficiency, EPS, and GDP would have a negative impact on carbon emission, and vice versa. Additionally, the Dumitrescu-Hurlin causality test revealed a causal relationship between environmental policy stringency, energy efficiency, green technology, and green energy consumption in the BRICS countries. Based on the current study's findings, diverse and feasible policy options are recommended for attaining carbon neutrality goals.