Does Energy Consumption Affect the Environment and Economic Growth: Evidence from Emerging Economies

Abstract

The relationship between economic growth, energy consumption, and carbon emissions has been extensively studied within the Environmental Kuznets Curve (EKC) framework. However, much of the existing literature focuses on the direct effects of energy consumption on the economic growth-carbon emission nexus, often overlooking the potential moderating influences of different energy sources. Thus, this study fills this gap by investigating the moderating effect of renewable energy consumption on the relationship between economic growth and carbon emissions in emerging economies using panel data methods. The study presents evidence supporting the existence of the EKC, indicating that economic growth negatively impacts the environment until a certain threshold of income is reached. Moreover, our results indicate that renewable energy weakens the relationship between economic growth and carbon emissions. This suggests that the adoption of renewable energy can help mitigate the negative environmental impacts of economic growth. Based on the findings, it is recommended that emerging countries should prioritize the integration of renewable energy into their energy mix, reduce dependence on fossil fuels, and promote economic growth strategies that align with environmental goals.