Pathways to environmental welfare: linking energy transitions, globalisation, natural resource rents, and load capacity factor in the advanced emerging countries

Abstract Global environmental challenges and mounting energy demands have intensified the need for sustainable development pathways, especially in advanced emerging economies facing rapid growth and ecological pressures. In this context, this study investigates how energy transitions, globalisation, and natural resource rents (NRR) affect environmental welfare, as measured by the Load Capacity Factor (LCF), across different levels of energy intensity. A panel smooth threshold regression (PSTR) model is employed on data covering the years 1995–2019 for 10 advanced emerging countries. A composite energy transition index is constructed using Principal Component Analysis (PCA) to capture multidimensional shifts beyond mere increases in renewable energy supply. This methodology allows us to endogenously determine threshold effects as energy intensity changes. The empirical results reveal a nonlinear relationship: below an energy intensity threshold of 4.7, energy transitions and globalisation do not significantly improve – and may even diminish – LCF, while NRR exerts a negative impact. However, once energy intensity exceeds approximately the value of 7.1, the environmental quality-enhancing benefits of energy transitions and globalisation become prominent, and the adverse influence of NRR loses significance. These findings suggest that in high energy-intensity economies, investments in renewable infrastructure and efficiency-enhancing technologies yield substantial environmental benefits. Accordingly, policymakers should tailor energy and environmental strategies to their respective energy intensity regimes to maximize the returns of decarbonization efforts.