The impact of clean energy consumption on economic growth and CO2 emissions in BRICS countries: Does the environmental Kuznets curve exist?

• Published date: 01 February 2021
• Author: Mallesh Ummalla,Phanindra Goyari
• Date: 01 February 2021
• DOI: http://doi.org/10.1002/pa.2126

ACADEMIC PAPER

The impact of clean energy consumption on economic

growth and CO

2

emissions in BRICS countries: Does

the environmental Kuznets curve exist?

Mallesh Ummalla | Phanindra Goyari

School of Economics, University of Hyderabad,

Hyderabad, India

Correspondence

Mallesh Ummalla, School of Economics,

University of Hyderabad, Hyderabad 500046,

India.

Email: mummalla@uohyd.ac.in

This paper examines the impact of clean energy consumption (CEC) on economic

growth (EG) and CO

2

emissions (CO

2

) within a framework of environmental Kuznets

curve (EKC) hypothesis in a panel of BRICS countries for the period 1992–2014. The

results indicated that CEC and EG have a significant positive impact on EG, while

CO

2

has a negative impact on it. Our results also found that EC and EG increase CO

2

while CEC significantly reduces it. Further, we found that the EKC hypothesis is valid

in the BRICS countries. Finally, panel causality test indicated that unidirectional cau-

sality running from EC to EG. However, we did not find a causal relationship between

CEC and EG. Based on these results, some of the policy implications have proposed

for these emerging market economies.

1|INTRODUCTION

Energy consumptio n (EC) is a towe ring funct ioning fact or of eco-

nomic growth (EG) along with capital and labor for any nation as

they are inputs in the production of goods and services. Every stage

of economic activities, from production to consumption, the county

largely relies on energy. Therefore, energy is the main driving force

of economic growth (EG) and industrialization. However, high EC

increases higher CO

2

emissions (CO

2

). According to the World

Bank (2019), the world gross domestic product (GDP) has increased

significantly, approximately two times, from $39,170.1 billion (con-

stant 2010 US$) in 1992 to $73,690.3 billion in 2014, with an aver-

ageannualgrowthrateof2.9%.Atthesametime,globalEChas

increased from 8,223.6 million tonnes oil equivalent (Mtoe) in 1992

to 12,939.7 Mtoe in 2014, with an average annual growth rate of

2.0%. The massive combustion for energy, especially conventional

energy sources, led to environmental issues. Therefore, global CO

2

has increased from 21,354.0 million tons (Mt) in 1992 to 32,844.8

Mt in 2014 (BP, 2018). In search of alternatives to carbon-intensive

fossil fuel, clean energy use has the considerable most effective

source of energy in the world.

Therefore, interna tional or ganizat ions, eco nomists , environ -

mental scientists, and policymakers are alarming the developed

and developing countries to shift their EC patterns from nonclean

to clean energy sources. In order to reduce CO

2

and control global

warming, the demand for clean energy has been increasing in the

world. The clean energy consumption (CEC) has many benefits

over nonclean energy sources. First, it is noncarbohydrate energy

that does not emit CO

2

when generated. Second, clean energy can

be widely used in both domestic (solar energy) and industrial sec-

tor. Third, development of clean energy projects in rural areas also

fills the gap between rural–urban energy in terms of accessible,

reliable, and affordable. Fourth, generation of clean energy will

reduce the dependence of imported nonclean energies, that is, oil,

gas, and coal, and so on. It will stabilize the macroeconomic perfor-

mance of the economy. Finally, installation of clean energy pro-

jects will create job opportunities directly or directly in the

economy.

The BRICS countries have accounted for 20.3% of the world

GDP, 36.7% of global EC, and contributed 41.9% of global CO

2

in

2014. The fact is that the significant development of clean energy

needed; otherwise, these countries will be struck into the insecure,

inefficient, and carbon-intensive energy system. To overcome this,

the BRICS countries have been heavily investing in clean energy pro-

jects. Pao, Li, and Hsin-Chia (2014) also suggested the development

of clean energy is a feasible solution for addressing energy security

and climate change issues. In 2014, Brazil's CEC accounted for 10.8%

of total energy use, Russia's was 8.1%, India's was 2.6%, China's was

Received: 23 December 2019 Revised: 30 January 2020 Accepted: 9 March 2020

DOI: 10.1002/pa.2126

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https://doi.org/10.1002/pa.2126