The Effect of Renewable Energy Development, Market Regulation, and Technological Innovation on CO2 Emission in BRICS Countries

Abstract

The relationship between energy, environment, and economic growth has been received a lot of attention recently among scientific studies, but environmental sustainability remains a global issue. Renewable energy production, technological advancement, and regulatory policy mechanisms can all help to reduce greenhouse gas emissions and support environmental sustainability. The purpose of this study was to look at the influence of renewable energy development, market regulation, and technological innovation on carbon emissions in the BRICS countries. Renewable energy development is measured by the contribution of renewables to the total primary energy supply. The market regulation represents the measure of environmental regulation policies that the state administrative department uses to manage or limit pollution. Technological innovation is measured by environment-related technologies. To examine the symmetric and asymmetric relationship between study variables, we used a second-generation panel unit root test, linear and nonlinear co-integration tests, and linear and nonlinear ARDL. Using a symmetric approach, we found that renewable energy development, technological innovation, and market-based environmental regulation policies had a considerable positive impact on lowering carbon emissions (CE). Furthermore, the combined effect of market regulation and renewable energy development, as well as market regulation and technology innovation on CE is negative and significant. In the asymmetric specification, we found that positive and negative shocks are not uniform but vary according to ascending and descending movement in the primary variables. In nonlinear specification, the long run effects are higher than the short run. The study suggests renewable energy development, technical innovation, and market-based regulation environmental policies are the main mechanisms to reduce carbon emission in BRICS countries.