Post-COP26: can energy consumption, resource dependence, and trade openness promote carbon neutrality? Homogeneous and heterogeneous analyses for G20 countries

The need to halt the pervasive issue of global warming has triggered commitments from policymakers, international organizations, and research pundits with an ambitious goal of neutralizing carbon emissions, forming the core of COP26 in November 2021. Consequently, the carbon neutrality agenda is globally debated in the environment and economic growth literature. Given the preceding narratives, this study examines the tripartite effects of energy consumption, resource dependence, and trade openness on carbon neutrality in G20 economies from 2001 to 2019. The empirical evidence relies on homogenous and heterogeneous dynamic models based on a system generalized method of moments (GMM), fully modified ordinary least squares (FM-OLS), and quantile regression estimators. The following results are evident from the empirical analyses. Among the heterogeneous indicators, nonrenewable energy, oil rents, coal rents, and imports contribute to the surge in carbon emissions, while renewable energy, gas rents, and exports moderate carbon emissions. The homogenous impacts show that total energy consumption, total natural resource rents, and trade openness promote significant carbon emissions. Further, the long-run results from FM-OLS and the disintegrated mean effects from quantile regression are robust for the main short-run results based on the two-step system GMM. Based on the empirical fallout, investing in renewable energy and diversifying from natural resource exploration are among the emanating policy that can enhance the sustainability of the G20 environment.

Automated summary

This study examines the tripartite effects of energy consumption, resource dependence, and trade openness on carbon neutrality in G20 economies from 2001 to 2019. The empirical evidence shows that nonrenewable energy, coal rents, and imports contribute to carbon emissions, while renewable energy, gas rents, and exports moderate carbon emissions. Total energy consumption, total natural resource rents, and trade openness promote significant carbon emissions. The findings suggest that investing in renewable energy and diversifying from natural resource exploration can enhance the sustainability of the G20 environment.