Energy mix outlook and the EKC hypothesis in BRICS countries: a perspective of economic freedom vs. economic growth

This study attempts to unveil an additional dimension to economic freedom within the framework of the environmental Kuznet curve (EKC) hypothesis using the panel data for BRICS (Brazil, Russia, India, China, and South Africa) economies over the period 1995-2018. Firstly, the study found that the EKC hypothesis is valid only in the long run for the panel countries. Secondly, we found that economic freedom mimics the pattern of economic output. Thus, when economic freedom is employed in lieu of economic growth, the EKC hypothesis is also validated only in the long run. Importantly, when both economic freedom and output are employed alongside, they produce the same carbon mitigation effect in each of the short-run and long-run periods. Thirdly, the country-specific evidence of the role of economic freedom and output in environmental quality is not less of a U-shaped relationship in the short run. Lastly, the impact of the bloc's energy mix (coal, natural gas, and oil energy utilization) on environmental quality is undesirable in both the short and long run; only in South Africa natural gas has the potential to mitigate carbon emissions. Overall, the study offers relevant policy measures for attaining Sustainable Development Goals (SDGs) target to combat climate change and its impacts.

Automated summary

This study reveals that economic freedom has a long-term impact on environmental quality in BRICS countries, and mimics the pattern of economic output. In both short and long run, the energy mix of BRICS countries has undesirable effects on environmental quality.