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The role of green finance and governance effectiveness in the impact of renewable energy investment on CO2 emissions in BRICS economies

Author

Listed:
  • Ashutosh Yadav

    (Patna, Bihar, India)

  • Bright Akwasi Gyamfi

    (Udaipur, Rajasthan, India)

  • Simplice A. Asongu

    (Johannesburg, South Africa)

  • Deepak Kumar Behera

    (Patna, Bihar, India)

Abstract

In the context of sustainable development, this study investigates the intricate dynamics among good governance, renewable energy investment, and green finance in BRICS nations. The aim of the study is to assess how green finance and governance effectiveness moderate the impact of renewable energy investment on CO2 emissions. Utilizing the Cross-Sectional Autoregressive Distributed Lag (CS-ARDL) model, a meticulous analysis spanning two decades was conducted to unravel the relationships among key variables and CO2 emissions. The findings underscore a nuanced interplay where renewable energy investments, synergized with robust governance and strategic green finance, significantly mitigate CO2 emissions, contributing to sustainable economic development. However, the study reveals non-linear relationships, highlighting the necessity for optimal allocation and strategic planning to maximize environmental benefits. In the short-run, a government effectiveness policy threshold that should be attained in order for renewable energy investment to reduce CO2 emissions is provided. In the long-run, the negative responsiveness of CO2 emissions to renewable energy investment is further consolidated by green finance. Moreover, enhancing renewable energy investment in the long run is positive for environmental sustainability. It follows that policy makers should tailor policies aimed at enhancing renewable energy investment in the long-run as well as complementing renewable energy investment with green finance in the long-run in order to ensure environmental sustainability by means of reducing CO2 emissions. Policymakers in BRICS nations are urged to strengthen governance structures, promote renewable energy investments, leverage green finance, foster public-private partnerships, adopt a holistic approach, and address non-linear effects to accelerate the transition to a low-carbon economy.

Suggested Citation

  • Ashutosh Yadav & Bright Akwasi Gyamfi & Simplice A. Asongu & Deepak Kumar Behera, 2024. "The role of green finance and governance effectiveness in the impact of renewable energy investment on CO2 emissions in BRICS economies," Working Papers of the African Governance and Development Institute. 24/015, African Governance and Development Institute..
    • Handle: RePEc:agd:wpaper:24/015
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    Cited by:

    1. Ahuja, Suman & Kumar, Ashish, 2025. "How public debt and renewable energy influence international clean energy finance: Insights from low- and middle-income countries with governance considerations," Finance Research Letters, Elsevier, vol. 86(PD).
    2. Sinan Erdogan & Guray Akalin & Daniel Balsalobre‐Lorente, 2025. "Paving the Road for Sustainable Development in Nordic Countries: Do Green Investments Make Difference?," Sustainable Development, John Wiley & Sons, Ltd., vol. 33(4), pages 5504-5517, August.
    3. You, Mingyang & Wang, Bo & Zhao, Jun & Huang, Hongyun, 2025. "Pathway to carbon reduction in China: The role of coupling synergies of the digital economy and green finance," Economic Analysis and Policy, Elsevier, vol. 86(C), pages 258-273.
    4. Jingjing Qi, 2024. "Greening economic sectors through trade liberalization and efficient governance," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 11(1), pages 1-8, December.
    5. Amin, Nabila & Sharif, Arshian & Shabbir, Muhammad Salman & Pan, Yanchun, 2025. "Evaluating the impact of natural resource rents, R&D expenditures, green finance and energy efficiency on carbon emissions in BRICS economies: Greening the path to carbon neutrality in the post-COP 27 era," Technology in Society, Elsevier, vol. 81(C).
    6. Ashraf, Muhammad & Ali, Mubashar & Sajjad, Ali, 2025. "Governance as a catalyst for green financial development: An investigation into financial inclusion, green technology innovation, and environmental regulations in Asian NDC countries," Innovation and Green Development, Elsevier, vol. 4(6).
    7. Nabila Amin & Muhammad Salman Shabbir & Yanchun Pan & Muhammad Asif, 2025. "Beyond Growth: The Triple Green Strategy (Green Energy, Green Innovation, and Green Finance) for Sustainable Emissions Reduction in BRICS Countries," Sustainable Development, John Wiley & Sons, Ltd., vol. 33(4), pages 5567-5586, August.
    8. Tatar, Veysel & Ayvaz, Berk & Pamucar, Dragan, 2025. "Analysis of renewable energy investments in China's BRI middle corridor using spherical fuzzy decision-making framework," Renewable Energy, Elsevier, vol. 244(C).
    9. Byaro, Mwoya & Timbuka, Monica, 2025. "Greening the future: Do green growth and institutional quality affect environmental sustainability differently across countries' income levels? International evidence," Innovation and Green Development, Elsevier, vol. 4(4).
    10. Kushawaha, Deepak, 2025. "Does public debt deter donor financing for renewable energy? Evidence from low- and middle-income countries," Finance Research Letters, Elsevier, vol. 85(PA).
    11. repec:rjr:romjef:v::y:2025:i:3:p:128-145 is not listed on IDEAS
    12. Zheng, Li & Wang, Juncheng & Zhu, Xiaoneng, 2025. "The impact of green financing on renewable energy growth in China: Insights from provincial data," Renewable Energy, Elsevier, vol. 251(C).
    13. Liu Xia & Nazneen Fatema, 2025. "Energy finance, digital financial inclusion, accountability and sustainable development: evidence from BRICS," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 12(1), pages 1-9, December.
    14. Huyen Do Phuong & John William Grimaldo Guerrero & Salem Hamad Aldawsari & Adeeb Alhebri & Iskandar Muda & Gniewko Niedbała, 2025. "Can mineral resources be a blessing in disguise for green finance in G7 countries? Mineral resources for COP28 green financing goal," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 38(3), pages 585-600, September.
    15. Zsuzsanna Novák & Gábor Fáth & Chenhe Ge & Pawan Kumar, 2025. "Inclusive green finance: as an approach of developing a comprehensive indicator for BRICS and other emerging economies," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 14(1), pages 1-23, December.
    16. Sana Slimani & Anis Omri, 2025. "Mitigating food insecurity through green energy and agricultural adaptation in the face of climate change," Economic Change and Restructuring, Springer, vol. 58(4), pages 1-27, August.
    17. Saqib Munir & Muhammad Khalid Anser & Aqil Waqar Khan & Md Shabbir Alam & Alamzeb Aamir & Khalid Zaman, 2025. "Powering the transition: geoscientific insights and policy levers for global renewable energy investment, pricing reforms and decarbonization pathways towards SDG 7 and SDG 13," Future Business Journal, Springer, vol. 11(1), pages 1-20, December.
    18. Okorie, David Iheke, 2025. "Making hay while the sun shines: Energy security pathway for Africa," Energy Policy, Elsevier, vol. 198(C).
    19. Yadav, Ashutosh & Gyamfi, Bright Akwasi & Agozie, Divine Q. & Asongu, Simplice A., 2026. "From resource curse to financial opportunity: A quantile-based frontier analysis of resources conversion efficiency in Southeast Asia," Renewable and Sustainable Energy Reviews, Elsevier, vol. 228(C).
    20. Juan Pablo Vallejo Mata & María Gabriela González Bautista & Luis Eduardo Solis Granda & Eduardo Germán Zurita Moreano, 2024. "Evaluating the Environmental Kuznets Curve: The Role of Renewable Energy, Economic Growth, Urban Density and Trade Openness on CO2 Emissions. An Analysis for High-Income Countries Using the CS-ARDL Model," International Journal of Energy Economics and Policy, Econjournals, vol. 14(6), pages 580-596, November.
    21. Tambari, Ishaya & Failler, Pierre & Jaffry, Shabbar & Yuan, He, 2025. "Could natural resources and financial development influence the markets for renewable energy in developing economies?," Resources Policy, Elsevier, vol. 108(C).

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