Economies in transition: carbon emissions and renewable energy in G7 and BRICS

Purpose This study investigates the relationship between trade, renewable energy consumption (REC), financial development (FD) and carbon emissions (CE) in G7 and BRICS countries. The aim of this paper is to understand how these factors interact and influence CE, providing insights for sustainable development strategies. Design/methodology/approach The research uses a comprehensive data analysis covering G7 and BRICS nations, using econometric models to evaluate the impact of various factors on CE. Key variables analyzed include investments in environment-related technologies (ERTs), REC, exports, the Financial Development Index (FDI) and imports of goods and services (IMPPC). Findings The study finds that investments in ERTs and REC have a significant negative correlation with CE. Conversely, exports exhibit a positive association with CE. The FDI shows a negative effect on CE, whereas IMPPC display a positive effect. These findings highlight the complexity of achieving sustainable development and the need for a balanced approach that prioritizes renewable energy, ERT investment and green financial growth. Research limitations/implications The research is constrained by the availability of consistent data across all BRICS nations, which may affect the breadth of the findings. Future studies should explore more granular data and consider additional variables to provide a more detailed understanding of the dynamics at play. Practical implications The findings offer valuable insights for policymakers in G7 and BRICS countries to design effective carbon reduction strategies. A balanced approach is necessary, emphasizing renewable energy, ERT investments and fostering FD geared towards sustainability. Originality/value This study contributes to the existing literature by providing a comparative analysis of G7 and BRICS nations, highlighting the differential impacts of trade, renewable energy and FD on CE. It sets a foundation for future research and policy formulation aimed at effective carbon reduction and sustainable development.