Revisiting the EKC Hypothesis for Environmental Quality in BRICS Countries: The Role of Energy Risk Improvement

Анотація

This study examines the impact of energy risk on environmental quality in BRICS economies (Brazil, Russia, India, China, and South Africa) from 2000 to 2024, including economic growth, renewable energy, institutional quality, urbanization and energy usage. Specifically, this study uses Fully Modified Ordinary Least Squares (FMOLS) under the Environmental Kuznets Curve (EKC) hypothesis to estimate long-run relationships in countries, assessing robustness through Driscoll–Kraay Standard Errors to address heteroskedasticity, serial correlation, and cross-sectional dependence. The empirical findings provide strong support for the EKC hypothesis, as evidenced by the positive and significant coefficient of economic growth and the negative and significant coefficient of its squared term. Energy consumption and urbanization are found to significantly increase environmental degradation, indicating their substantial contribution to emissions. In contrast, renewable energy consumption significantly reduces emissions, highlighting its role in improving environmental sustainability. Importantly, energy risk does not exhibit a statistically significant impact on environmental quality, suggesting that energy security vulnerabilities have not directly translated into measurable environmental effects in the long run across BRICS countries. Institutional quality shows a positive and significant relationship with emissions, implying that governance improvements alone have not yet effectively supported environmental sustainability and decarbonization efforts. Overall, the findings underscore the need for integrated policy frameworks that promote renewable energy adoption, manage urban expansion, and enhance the effectiveness of institutional mechanisms to achieve sustainable environmental outcomes in BRICS economies.

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