Geopolitical risks, energy consumption, and CO2 emissions in BRICS: an asymmetric analysis

Zhao, Weijun; Zhong, Ruoyu; Sohail, Sidra; Majeed, Muhammad Tariq; Ullah, Sana

Geopolitical risks, energy consumption, and CO2 emissions in BRICS: an asymmetric analysis

2021

Zhao, Weijun | Zhong, Ruoyu | Sohail, Sidra | Majeed, Muhammad Tariq | Ullah, Sana

Environmental pollution is a geopolitical problem, and researchers have not considered it seriously yet. This study examines the asymmetric influence of geopolitical risk on energy consumption and CO₂ emissions in BRICS economies using the non-linear autoregressive distributed lag model (NARDL) testing method over the period of 1985–2019. Therefore, we observed that in the long run, a positive and negative change in geopolitical risk has negative effect on energy consumption in India, Brazil, and China. The outcomes confirmed that an increase in geopolitical risk has negative effect on CO₂ emissions in Russia and South Africa. Although a decrease in geopolitical risk has negative effects on CO₂ emissions in India, China, South Africa, it has positive coefficient in Russia in the long run. Based on empirical findings, we also revealed that asymmetries mostly exist in terms of magnitude rather than direction. Our empirical results are country and group specific. The findings call for important changes in energy and environment policies to accommodate geopolitical risks.

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