Testing the Impact of Renewable Energy and Institutional Quality on Consumption-Based CO 2 Emissions: Fresh Insights from MMQR Approach

The motivation for this research stems from the United Nations Sustainable Development Goals (UN SDGs), specifically SDGs 7, 11, 12, and 13, which focus on the mitigation of climate change and sustainable economic development. This study examined the impact of renewable energy use, institutional quality, and production expansion on consumption-based carbon dioxide (CCO 2 ) emissions in BRICS countries (Brazil, Russia, India, China, and South Africa) from 1996 to 2020. To achieve this, we applied advanced econometric techniques, including second-generation cointegration and unit root tests, along with the novel panel method of moments quantile regression (MMQR). The Westerlund cointegration test confirmed the presence of a long-run co-movement among renewable energy usage, economic growth, institutional quality, and environmental quality, suggesting a stable equilibrium relationship between these variables. The results from MMQR reveal that GDP has a positive and statistically significant effect on CCO 2 emissions across all quantiles, indicating that economic expansion contributes to environmental degradation. In contrast, renewable energy consumption and institutional quality show negative and significant impacts on CCO 2 emissions, indicating their mitigating effect on environmental deterioration. As a robustness check, the findings from fixed-effect OLS (FE-OLS), generalized method of moments (GMM), and common correlated effects mean group (CCEMG) estimations broadly confirm the results of MMQR. These findings underscore the importance of renewable energy consumption and strong institutional frameworks in promoting environmental sustainability.