Does energy efficiency improve environmental quality in BRICS countries? Empirical evidence using dynamic panels with heterogeneous slopes

In a time of climate change, critically contributed by the increased global energy consumption, energy efficiency comes out as a critical factor in achieving sustainable growth for the countries. Given the fast economic advancement in the BRICS (Brazil, Russia, India, China, and South Africa) countries that have played a vital role in the global economy, energy usage, and climate governance, this study investigates the role of energy efficiency on the environmental quality of these countries. We proxy environmental quality with CO 2 emissions, incorporate renewable energy in our models, and estimate the relationship with a long-panel data of 29 years (1990–2018). Our dynamic heterogeneous panel model findings confirm that energy efficiency significantly reduces CO 2 emissions or improves environmental quality in the long run and the short run. Besides, we find that renewable energy has a crucial role in enhancing environmental quality in the long run with the negative impact of economic growth activities. Our findings contribute to the literature in a novel way facilitating the comprehension of the role of energy efficiency using a wide range of sophisticated techniques, thus providing robust results. For the policymakers, we humbly advocate strategies for the clean and sustainable economic transition based on our findings which has notable implications for the BRICS, other developing economies, and the world as a whole.