The nexus between renewable energy, environmental pollution, and economic growth across BRICS and OECD countries: A comparative empirical study

This study examined the causal nexus between renewable energy consumption, GDP, and CO2 emissions across BRICS and OECD countries from 1995 to 2021, using various econometric techniques including FMOLS and DOLS estimators. It also reviewed the most recent literature on this nexus, aiming to understand the impact of renewable energy development on economic growth and CO2 emissions reduction. The long-run estimations from FMOLS and DOLS showed that the majority of the observed variable coefficients were statistically significant at 1%, 5%, and 10% levels. In panel FMOLS estimation for the BRICS, a 1% increase in GDP correlates with a 0.204% increase in renewable energy (RE). However, an increase in CO2 emissions significantly reduce RE by 0.994%. In contrast, the panel DOLS estimation shows that a 1% increase in GDP improves RE by 0.399%, while an increase in CO2 emissions drops RE by 1.369%. Similarly, in panel FMOLS estimation for the OECD indicates that a 1% increase in GDP correlates with a 0.083% rise in RE, but an increase in CO2 emissions leads to a decrease in RE by 1.476%. In the DOLS panel, a 1% rise in GDP correlates with a 0.054% increase in RE, while an upsurge in CO2 emissions diminishes RE by 1.369%. The nexus among renewable energy consumption, CO2 emissions, and GDP is intricate and interconnected. Renewable energy is a key solution to mitigate CO2 emissions and foster sustainable GDP growth. Nevertheless, CO2 emission has significant negative impacts on both the deployment of renewable energy and GDP, underscoring the necessity for sustainable development practices.