Exploring the interplay of financial development, renewable energy, and global climate agreements in carbon emission dynamics: Insights from BRICS economies

This study addresses the critical gap in understanding why uniform climate policies falter in BRICS economies, where institutional and structural heterogeneities create nonlinear, context-dependent decarbonization pathways. We investigate how financial development (FDEV), renewable energy consumption (REC), and global climate agreements interact with political-economic dynamics to shape emissions trajectories. Employing a multi-country ARDL model (1990–2022) selected for its robustness in analyzing cointegration and dynamic policy impacts across diverse economies, we uncover divergent outcomes: FDEV reduces emissions in Russia (−0.28t) through state-aligned green financing but exacerbates them in China (+0.12t) due to provincial carbon-intensive investments, underscoring regulatory fragmentation. India's REC adoption inadvertently reinforces coal dependency (+0.14tCO₂E), revealing systemic bottlenecks like fossil subsidies and grid inefficiencies. The Paris Agreement drives incremental progress where climate goals align with development priorities (e.g., India's solar expansion), while Kyoto succeeded only in institutionally congruent contexts (e.g., Russia's Soviet-era reforms). These findings challenge one-size-fits-all climate governance, demonstrating that institutional coherence and adaptive frameworks, not rigidity, determine policy efficacy. Globally, it advocates asynchronous compliance mechanisms aligned with regional capacities, offering a replicable framework for emerging economies navigating growth-climate trade-offs. By centering institutional readiness and crisis-responsive design, this work redefines equitable decarbonization, transforming structural heterogeneities from barriers into catalysts for transition.