The Asymmetric Effect of Renewable and Nonrenewable Energy on CO2 Emissions in BRICS Countries: Evidence from Nonlinear Panel NARDL

This study investigates the asymmetric and heterogeneous effects of renewable energy, non-renewable energy, capital stock, labour, and trade openness on CO2 emissions in BRICS countries over the period 1991–2022. The study applies a panel nonlinear autoregressive distributed lag (PNARDL) model to capture short- and long-run asymmetries, complemented by a panel quantile nonlinear ARDL (QNARDL) to assess distributional heterogeneity. Robustness is ensured using Fully Modified Ordinary Least Squares (FMOLS) and Robust Least Squares (RLS) estimators. The study is grounded in the Environmental Kuznets Curve (EKC) and Just Energy Transition Theory. The results reveal a stable long-run cointegrating relationship among the variables, with a significant error correction mechanism confirming convergence toward equilibrium. Renewable energy consumption consistently reduces CO2 emissions in both the short and long run, while non-renewable energy significantly increases emissions, exhibiting strong asymmetric effects. Capital stock shows mixed dynamics, increasing emissions in the short run but reducing them in the long run when directed toward productive and efficient investments. Labour is found to reduce emissions in the long run, highlighting the role of human capital in supporting cleaner production. Trade openness generally increases emissions, reflecting energy-intensive trade structures. Quantile results confirm heterogeneity, with stronger renewable energy effects at higher emission levels and greater environmental gains from reducing fossil fuel dependence than from increasing it. The FMOLS and RLS estimations confirm robustness, reinforcing the negative relationship between renewable energy and emissions and the positive impact of non-renewable energy. The study recommends accelerated renewable energy deployment, fossil fuel phase-down strategies, and targeted green capital investment. It further emphasizes grid modernization and energy storage systems to enhance renewable integration, alongside labour reskilling and green trade policies. These coordinated strategies are essential for achieving sustainable decarbonization in BRICS economies.