Energy production-income-carbon emissions nexus in the perspective of NAFTA and BRIC nations: a dynamic panel data approach

This paper has attempted to examine the impact of innovation and energy production (i. e., oil, natural gas, and coal) on carbon dioxide emissions (CO2e) in the context of the Environmental Kuznets Curve (E.K.C.) hypothesis. Data were analysed for economies in B.R.I.C. (Brazil, India, Russia, and China) and North American Free Trade Agreement (N.A.F.T.A.) (the U.S., Canada, and Mexico) from 1992 to 2016. Based on the Hausman specification test, the panel mean group (P.M.G.) estimation approach was adopted. The empirical results suggested that an upsurge in coal and oil production has increased, while the gas production has disrupted CO2e in the long run. An insignificant yet positive relationship was observed between innovation and CO2e. The positive effect of per capita income and the negative effect of per capita income (square) on CO2e validated the presence of the E.K.C. hypothesis in the sampled economies. With the results showing an acute over-dependency on carbon-intensive energy sources (coal and oil), an imminent need exists for production of natural gas; at the same time, more investments are needed for exploration of low carbon-intensive renewable energy sources for environmental sustainability.