Advancing a low-carbon future: Impacts of renewable energy, finance, and natural resources on consumption-based carbon in emerging markets

Abstract

Abstract Economies around the world are currently facing the significant challenge of balancing economic growth with ecological sustainability. While this is a global issue, emerging economies, because of their substantial environmental, demographic, and economic influence, deserve urgent attention. In light of the above, this study examines the factors shaping environmental sustainability (proxied by consumption-based carbon emissions) in emerging seven economies (E7) from 2004 to 2021. The study deployed the novel Method of Moment Quantile-based Regression (MMQR) and revealed that natural resources have negative effects on ecological sustainability by increasing consumption-based carbon emissions (CCO 2) in E7 economies across all quantiles. Conversely, financial inclusion, financial globalization and the adoption of renewable energy decrease CCO 2 thereby improving performance. In other words, the study established that higher dependence on resource endowment intensifies ecological harm whereas financial inclusion, renewable energy deployment and financial globalization strengthens ecological quality. Given these discoveries, the study underlined the criticality of enhancing resource governance to effectively guarantee that resources are exploited responsibly, catalyzing the uptake of green energy to delink growth from resource-based emissions and encouraging financial institutions to offer sustainable financial instruments. These strategies can bolster environmental well-being while also promoting inclusive economic development.