DECARBONIZING THE ECONOMY: UNPACKING THE ROLES OF GREEN TRANSITION, NATURAL RESOURCES, FINANCIAL GLOBALIZATION, AND CARBON PRICING IN CARBON INTENSITY

Abstract

BRICS economies account for a large share of global emissions; however, the forces that reduce their carbon intensity remain contested. This study examines how the green transition, natural resources, financial globalization, and carbon pricing relate to carbon intensity.​ We use annual data for Brazil, Russia, India, China, and South Africa from 1990 to 2023. Diagnostics show cross-sectional dependence, a mix of I(0) and I(1) variables, and provide qualified evidence of cointegration. Therefore, we estimate long-run relationships with fully modified OLS and check them using Driscoll-Kraay ​standard errors. Carbon pricing and green transition are associated with lower carbon intensity under both estimators, with baseline coefficients of -0.567 and -0.139, respectively. Financial globalization is associated with higher carbon intensity (0.519) and a Pollution Haven pattern in which international capital has not, on average, favored cleaner activity. Trade openness is linked to lower carbon intensity, and the natural resource proxy has a small negative association. Population growth also carried a negative sign, which reflected the per-capita measure and should not be read as a mitigation lever. The findings indicate that decarbonizing BRICS economies depends on fiscal pricing and energy transition, and steering foreign capital toward low-carbon assets.