The Impact of Renewable Energy; Financial Development and Economic Growth on Carbon Emission: Empirical Evidence from a Developing Economy

Abstract

This research investigates the impact of renewable energy; financial development, economic growth, nonrenewable energy and natural resource rents on carbon emissions in Pakistan. An annual data series ranging from 1990 to 2022 is used; while Pesaran’s et al. (2001) cointegration test is utilized and empirical results confirm that renewable energy, financial development, nonrenewable energy and economic growth have long run cointegrating relation with carbon emissions. The results further provide evidence that utilization of clean energy combats carbon emission while financial development, economic growth and unclean energy promote carbon emission. Natural resource rents also help in combating carbon emission but only in long run. These results are reliable as guided by diagnostics used in this research. This research suggests that both clean energy and natural resources must be promoted to combat carbon emissions while financial development; economic growth and nonrenewable energy may be escalated carefully because these are promoting environmental pollution in Pakistan.