The impact of the Paris agreement on economic growth and CO2 emissions nexus: evidence from a panel of emerging countries

Purpose This study aims to analyze the dynamic relationship between economic growth, CO2 emissions, fossil fuel consumption and trade openness in 15 emerging economies over the period from 1982 to 2022. Design/methodology/approach The panel vector autoregressive (PVAR) model based on the system generalized method of moments (system-GMM) is used to (1) capture dynamic relationships and (2) address endogeneity among variables. By examining this impact in both pre- and post-Paris Agreement periods, this study sheds light on structural changes in the nexus of interest. Additionally, the unit root tests and impulse response functions are applied to assess stationarity and variable interactions over time. Findings Our results show that economic growth and fossil energy consumption increased CO2 emissions before the Paris Agreement. After its adoption, the growth–emissions relationship reversed, indicating decoupling, while the effect of fossil energy weakened. Trade openness also lost its significant causal effect on CO2 emissions, contrasting with the pre-Paris bidirectional relationship. Originality/value This study highlights the pivotal role of the Paris Agreement in reshaping the growth–emissions nexus in emerging economies, emphasizing the potential of international climate policy to drive sustainable development transitions.