Decarbonization Pathways in BRICS Economies: Exploring the Role of Economic Growth, Renewable Energy and Governance in CO ₂ Emissions

The present work evaluates the influence of renewable energy use and institutions' integrity on CO 2 release in the BRICS bloc during 1996–2023, after controlling for foreign direct investment (FDI), economic growth and industrialisation. In order to reflect the shift in global climate governance, the study period is further divided into two sub‐periods, namely, before the Paris Agreement (1996–2014) and after the Paris Agreement (2015–2023). The study uses the second‐generation panel technique, and then, Method of Moments Quantile Regression is used to deal with heterogeneity of distribution, while Generalized Method of Moments (GMM) is employed to control endogeneity. These upshots show that economic growth is always associated with an increase in carbon dioxide emissions; therefore, it demonstrates that there will always be a trade‐off between development and the environment. Renewable energy is found to reduce carbon emissions; moreover, its effects tend to be much stronger at high levels of carbon emissions. FDI tends to be positively correlated with carbon emissions; however, its impacts become weaker after the Paris Climate Change Conference. Industrialisation and institution quality show time‐sensitive impacts, as institution quality becomes environmentally friendly after the Paris conference. In addition, these results also show that the efficacy of renewable energy depends on patterns of investment and institutions. The GMM estimation supports the empirical evidence obtained from these results, while causality analysis shows that relevant variables influence environmental results.