Green innovation, foreign investment and carbon emissions: a roadmap to sustainable development via green energy and energy efficiency for BRICS economies

Abstract

In contemporary times, emerging economies are intended to achieve higher economic growth via foreign direct investment and technological innovation. However, due to increased environmental challenges, these economies are adopting green energy as the key source of environmental recovery and net zero emissions. The present study investigates the influence of FDI, technological innovation, green energy, and trade on carbon emissions in BRICS economies during 1990–2022. This study also considers the role of economic expansion in identifying the environmental Kuznets curve (EKC). Using several panel diagnostic and cointegration tests, this study validates the slope heterogeneity and the existence of the cointegration between variables. Due to the non-normal data dispersion, this study uses novel moments quantile regression, while bootstrap quantile regression is used for the robustness. The results examined asserted the presence of the EKC hypothesis in the region, where the initial growth enhances emissions while after reaching at a threshold level, the emission level tends to reduce and environmental quality improves. Besides, this study observed that foreign trade and technological innovation are the key drivers of environmental degradation as these indicators significantly enhances pollution emissions. In contrast, foreign investment, energy efficiency, renewable electricity output, and renewable's consumption significantly improve environmental quality by declining carbon emissions. Following the empirical results, the policy recommendations asserted enhanced investment in renewable and energy efficiency sectors while attracting more foreign investment for sustainable development.