Decarbonizing Agriculture: The Impact of Trade and Renewable Energy on CO2 Emissions

This study investigates the environmental effects of agricultural trade, renewable energy use, and economic growth in a panel of 14 selected countries for the period 2000–2021. Per capita CO2 emissions are modeled as the dependent variable using a second-generation panel data method, the Augmented Mean Group (AMG) estimator, which accounts for cross-sectional dependence and slope heterogeneity. The analysis reveals that the share of renewable energy in total energy consumption significantly reduces carbon emissions, emphasizing the role of green energy policies in environmental improvement. In contrast, economic growth is found to increase emissions, indicating the validity of only the initial phase of the Environmental Kuznets Curve (EKC) hypothesis. Additionally, agricultural imports—and in certain cases, exports—exert upward pressure on emissions, likely due to logistics and production-related externalities embedded in the trade process. Group-specific results highlight distinct dynamics across countries: while renewable energy adoption plays a stronger role in emission mitigation in developing economies, trade composition and production technology drive environmental outcomes in developed ones. The findings underscore the need to redesign trade and energy strategies with explicit consideration of environmental externalities to align with long-term sustainability objectives.