The empirical relationship between carbon emission and energy use of BRICS nations

• Published date: 01 February 2021
• Author: Narendra N. Dalei,Hiranmoy Roy
• Date: 01 February 2021
• DOI: http://doi.org/10.1002/pa.2154

ACADEMIC PAPER

The empirical relationship between carbon emission

and energy use of BRICS nations

Narendra N. Dalei | Hiranmoy Roy

Department of Economics and International

Business, School of Business (SoB), University

of Petroleum and Energy Studies (UPES),

Dehradun, India

Correspondence

Narendra N. Dalei, Department of Economics

and International Business, School of Business

(SoB), University of Petroleum and Energy

Studies (UPES), Kandoli Campus, Knowledge

Acres, Dehradun 248007 India.

Email: ndalei@ddn.upes.ac.in; nndalei@

gmail.com

In literature, there has been a large number of empirical research to examine the

impact of CO2 emission on economic activity popularly known as the Environmental

Kuznets curve having an inverted U shape relationship. The increasing environmental

problem and environmental degradation are global phenomena due to increasing eco-

nomic activities. In order to verify this relationship empirically in the context of

BRICS nations, the present study intends to investigate the importance of energy use

in the estimation of carbon emission while controlling GDP, industry value added and

trade openness using Ordinary Least Square (OLS) and Fixed Effect (FE) Models. Our

findings have confirmed that the relationship between CO2 emission and GDP con-

firmed inverted U-shaped of the EKC. The direction of the relationship between

squared LNIVA and LNCO2P further reinforce the inverted U-shaped EKC. The rela-

tionship between LNEU and CO2P also satisfied the inverted U-shape of the EKC.

This may be due to the practice of energy efficiency and energy conservation mea-

sures in industrial sectors in BRICS nations. However, BRICS nations should also

emphasize renewables and policies need to be aligned accordingly to keep CO2 emis-

sion at a lower level so that global warming could be kept to below 1.50C, which is

the target given by Paris Agreements.

1|INTRODUCTION

The increasing environmental problem and environmental degradation

are global phenomenon due to increasing economic activities. We

came across number of studies in the literature those addresses the

relationship between economic activity represented by GDP and the

environmental quality represented by several indicators. In literature,

there has been large number of empirical research to examine the

EKC hypothesis that postulates an inverted U shaped relationship

among GDP reflecting economic activity and environmental pollution

represented by CO2 emission and environmental effect due to accen-

tuating environmental problem and environmental degradation glob-

ally. Environmental degradation is measured by the level of pollution

and emissions or CO2 emissions etc. Many researchers worked and

analyzed this relationship without giving any specific direction and

causality between these variables. However, most of the studies have

confirmed this relationship through experiment and thus investigated

the existence or absence of statistically significant relationship

between these variables. The empirical studies have estimated the

regression line of impact of GDP activity on CO2 emission. These

studies have used cross-country cross-sectional data and examined

whether the causal relationship is inverted U-shape or not? The

results of this research have postulated a unidirectional relationship

that shows that a variation in GDP represented by economic activity

causes a resulting impact on environment. This relationship may not

hold true in all situations. It is very important to understand whether

level of economic activity is a dependent or independent variable with

respect to environmental quality and this relationship will be affected

by various macro-economic characteristics under consideration. We

can also use econometric tools like granger causality test for the time

series data set showing level of activity and resultant environmental

change having statistically significant association or among these vari-

ables and what is the direction of causality (Coondoo & Dinda, 2002).

There are several studies with respect to this relationship con-

ducted in the year 2009, 2010, 2011, 2012, 2013 and 2014 by several

authors. This is observed from this literature that there are important

evidences of direction of causality exists between the three variables

mentioned in our study. There are no one way causality among these.

Received: 29 March 2020 Accepted: 8 April 2020

DOI: 10.1002/pa.2154

J Public Affairs. 2021;21:e2154. wileyonlinelibrary.com/journal/pa © 2020 John Wiley & Sons, Ltd 1of6

https://doi.org/10.1002/pa.2154