Role of environmental policy stringency, energy transition, and income in ensuring low-carbon environment: A time-frequency analysis

Summary: Public interest concerning the environmental progress of economies has been developing across societies and countries. Such awareness requires dealing with energy, environment, and economic sides altogether. By considering this reality, this research investigates that how there is an effect of environmental policy stringency (EPS), energy transition index (ETI), and income (gross domestic product, GDP) on CO2 emissions. In doing so, the research analyzes BRICS countries, which are leading developing countries causing high emissions and consuming large amounts of energy, uses data between 2000/Q1 and 2020/Q4, and uses wavelet local multiple correlation approach to analyzes the nexus across times and frequencies. The results demonstrate that (i) EPS declines CO2 emissions in Brazil at low and high frequencies; (ii) GDP curbs CO2 emissions in India at high frequencies; (iii) across remaining times and frequencies, EPS, ETI, and GDP have a mixed effect in BRICS countries; (iv) based on four-variate cases, EPS, ETI, and GDP have an increasing combined effect on CO2 emissions across all times, frequencies, and countries; (v) the most dominant factor differs according to frequencies and countries, where ETI is mainly leading in Brazil, Russia, and India, EPS is pioneering in South Africa, and China has a mixed situation. Thus, the research empirically proves the diverging effects of EPS, ETI, and GDP on CO2 emissions across times, frequencies, and countries.