Analysis of disaggregated level energy use, income, geopolitical risk, energy transition, and energy price impact on decarbonization of main sectors in BRICS countries by marginal analysis

Abstract

This study analyzes the impact of critical factors (i.e., energy consumption (EC), income (GDP), geopolitical risk (GPR), energy transition, and energy prices). In doing this, the study focuses on Brazil, Russia, India, China, and South Africa (BRICS) countries, which are the leading emerging countries, considers carbon dioxide (CO2) emissions industry, power, and transport sectors, uses yearly data from 2000 to 2022, and performs a kernel-based regularized least squares (KRLS) approach to uncover the marginal impact of the factors. The outcomes demonstrate that (a) the impacts of the factors on sectoral CO2 emissions vary marginally across economic sectors, factors used, and levels of the variables; (b) the statistical significance of the factors considered differentiate, which implies that some factors are much more critical than others across countries and sectors; (c) for industry sector CO2 emissions, Brazil can benefit from the marginal decreasing impact of gas and renewable EC, GDP, and GPR, whereas it is valid in Russia (South Africa) for gas (GPR and energy prices) impact; (d) for power sector CO2 emissions, Brazil can use nuclear EC, energy transition, and energy prices, whereas nuclear and renewable EC, as well as GDP and GPR (renewable EC and GPR), is beneficial for Russia (South Africa); (e) for transport sector CO2 emissions, GPR (renewable EC) can be relied on in Brazil (Russia); and (f) the KRLS approach has a superior prediction capacity reaching 99.8%. Overall, the study empirically shows the varying marginal impacts of the factors on the decarbonization of the sectors.