The impact of energy consumption on environmental pollution in newly industrialized countries

Abstract

This study examines the impact of energy consumption on the environment for ten newly industrialized countries through panel data methods using the data covering the period 1970-2022. Due to the presence of cross-section dependence in the panel data, the CIPS unit root test is performed. The cointegration test shows the existence of a long-run relationship between energy consumption and ecological footprint. Long-run heterogeneous panel elasticities are estimated through the Common Correlated Effects Mean Group (CCEMG) estimator and the Augmented Mean Group (AMG) estimator. Empirical results reveal that energy consumption increases environmental pollution in all examined countries, with statistically significant effects observed for Brazil, China, India, Indonesia, Malaysia, Mexico, the Philippines, South Africa, Thailand, and Türkiye. Causality results show the presence of unidirectional causality from energy consumption to ecological footprint. This empirical analysis provides policy-makers with policy recommendations for the effective and efficient use of renewable energy resources —such as providing incentives and promoting environment-related technologies—for a sustainable environment in the long run.