External Debt, Renewable Energy, and Environmental Quality

in BRICS Countries: Novel Findings Based on The Load

Capacity Factor
Ahmed Samour (  asamour@du.edu.om )
Dhofar University
Tomiwa Sunday ADEBAYO
Cyprus International University

Research Article

Keywords: External Debt, Renewable Energy, Environmental Quality, BRICS Country

Posted Date: December 7th, 2022

DOI: https://doi.org/10.21203/rs.3.rs-2328886/v1

License:   This work is licensed under a Creative Commons Attribution 4.0 International License. Read Full License

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Abstract
Since the introduction of the Sustainable Development Goals (SDGs), the BRICS nations have had difficulty in achieving
the SDG targets, since sustaining ecological integrity has been a struggle for them. As a result, this research utilized a
holistic indicator defined as load capacity factor to assess environmental quality derived from two major ecological
elements: ecological footprints and bio-capacity. There is insufficient evidence in the available literature to investigate the
variables influencing the load capacity factor in terms of environmental quality. From 1990 to 2018, this study examines
the influence of external debt and renewable energy usage in improving the load capacity factor in BRICS nations. The
research used sophisticated panel data estimates that can handle cross-sectional dependence and slope heterogeneity to
assess the long-run relationship between the indicators. Furthermore, the study utilized MMQR to capture the association
at different quantiles. The results illustrate that REC positively impacted the LCF in BRICS nations. In contrast, the findings
illustrate that NREC, ED, and GDP adversely impact the LCF factor. These findings affirmed that REC positively and
significantly influences promoting environmental sustainability in BRICS nations. While NREC, ED, and GDP have an
adverse influence on the level of environmental sustainability. Furthermore, the MMQR results support both CCEMG and
AMG long-run estimators. Based on these findings, the BRICS policymakers should design new policies to promote
environmental sustainability by reinforcing the efficiency of energy systems and increasing the level of green energy
investment.

1. Introduction
Global energy demand is continuously increasing and is one of the critical concerns in the last decades due to its severe
implications in the context of global warming (Akram et al.,2022). However, economic development is highly dependent
on energy utilization as it plays a significant role in generating all activities that contribute to economic development. The
International Energy Agency has reported that a significant increase in global energy demand can be attributed to high
economic and population growth rates (Sadiq et al., 2022). This significant increase eventually jeopardizes environmental
sustainability, whereas controlling the energy utilization is inevitable as it will also affect the economic development
levels. The researchers and policymakers are assessing the issues caused by global warming and their possible solutions.
In this regard, several empirical papers assessed the impact of economic growth and renewable energy utilization on CO2
emission (e.g., Samour et al.,2022; Habeşoğlu et al.,2022; Qashou et al.,2022; Chen et al.,2022; Zoaka et al.,2022; Zoaka et
al.,2022; Adebayo,2022; Cui et al.,2022). However, this proxy has been criticized by literature. According to Pata and
Samour (2022), this proxy did not consider the individual effect of researchers. To overcome this issue, some empirical
papers evaluated environmental sustainability using a novel index, namely, the load capacity factor (LCF). However, this
index aims to present an accurate proxy to assess environmental sustainability. (see, e.g., Pata and Samour ,2022; Xu et
al., 2022; Pata and Balsalobre-Lorente, 2022). This factor implies the strength of a state to promote the population-based
existing lifestyle. The index of the load capacity is estimated as biocapacity/ecological footprint. In this regard, the paper
aims to provide novel evidence by testing the impact of external debt on load capacity factor (LCF).

Since the mid-1990s, external debt has tended to increase, and developed countries, followed by emerging nations, are
responsible for most of the significant increase in external debt. According to the World Bank, emerging nations have
mainly attributed to the increase in global external debt in the last decades. A significant increase in external debt and its
impacts has received much attention from the empirical literature. Some empirical studies focused on the linkage
between the external debt and GDP level (E.g., Saxena and Shanker,2018; Chen and LI, 2019; Butts, 2009). Other empirical
studies focused on the interrelation among external debt and CO2 emissions (e.g., Beşe and Friday,2022; Akam et
al.,2022b; Sadiq et al.,2022; Katircioglu and Celebi,2018). However, in the energy and environment literature, there is a
scarcity of empirical research that assesses the interrelation between external debt and load capacity factor as a novel
environmental sustainability index. However, it is observed that the influence of external debt on the LCF in the empirical
literature is ignored. In this respect, the current paper aims to assess the impact of external debt on LCF in BRICS nations.

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These nations have faced significant economic development compared to other emerging nations from 1990–2018. In
this context, the gross domestic product (GDP) in these nations represents around 21 percent of global GDP, and foreign
reserves in BRICS nations reached more than four trillion USD. In addition, the BRIC population represents around 42% of
the world's population (Sadiq et al.,2022). Along with significant economic development, there has been a significant
increase in external debt (Baloch et al., 2022). In this context, the BRICS nations have faced a massive increment in
external debt. In Brazil, the external debt increased from120.3 billion USD in 1990 to around 557.7 billion USD by the end
of December 2018. In Russia, the external debt increased from111.4 billion USD in 1990 to around 471.8 billion USD by
the end of December 2018. In India, the external debt increased from 83.4 billion USD in 1990 to around 521.8 billion USD
by the end of December 2018. In China, the external debt increased from 55.3 billion USD in 1990 to around 1961.5 billion
USD by the end of December 2018. In South Africa, the external debt increased from 124. billion USD in 1990 to around
738.4 billion USD by the end of December 2018 (see Fig. 1).

On the other hand, renewables have become an important energy source in the BRICS nations such as Brazil, India, and
China (Fareed and Pata,2022). These nations are considered the world's leading consumers of renewable energy. In this
regard, the portion of renewable energy in the total energy utilization in 2018 is 47% in Brazil, 31% in India, and 13.2% in
China (Zoaka et al.,2022). However, as the BRICS nations have appeared as economic superpowers, these nations are
also facing considerable challenges about global warming as a result of their economic development. BRICS nations are
consuming around 42% of the total energy in the world and are significant contributors to carbon emissions (Sadiq et
al.,2022). Furthermore, dependency on non-clean energy sources such as fossil-fuel source makes this nation a great
contributor to global climate change and global warming. For example, China is one of the highest carbon emitters
globally, with approximately 28% of total emissions worldwide. The country's main energy source is oil(Caglar et al.,2022).

However, the present paper fills gaps in the existing environment literature in four ways: Firstly, there is no empirical paper
that investigates the influence of external debt on LCF. This proxy is employed to capture environmental sustainability
owing to its comprehensiveness and completeness (Pata and Samour,2022). It does so by leveraging the load capacity
factor to manage both ecological indications at the same time. While focusing on the climate action (SDGs 13) goal,
concentrating just on ambient air pollution may not provide a realistic image; consequently, the existing paper employed a
more comprehensive metric of environmental sustainability known as the load capacity factor. Secondly, several
methodologies such as panel ARDL and FMOLS have been used in the existing empirical studies to investigate the
determinants of environmental sustainability. The method of moments quantile regression (MMQR) approach is not
commonly employed. Therefore, the current paper presents robust outcomes on the interrelation between the focused
variables by considering advanced approach models. In this context, the study employed a novel approach of MMQR
approach to assessing the impact of external debt, renewable and nonrenewable energy, and GDP across different
quintiles of the conditional distribution of load capacity factor. Thirdly, the present paper aims to provide significant
recommendations to the government policymakers and literature to avoid the negative impacts of external debt on
environmental sustainability by supporting green investment.

The remaining components of the present study are divided into four parts: the literature review is presented in Section 2.
The technique and data are grouped in Section 3, the empirical results and discussion of findings are introduced in
Section 4 and 5. The study's ramifications and policy framework are presented in Section 6.

2. Literature Review
This segment has addressed the environmental literature that is currently available and connected to the research
variables as an empirical foundation for future investigation. Nevertheless, the first portion of the research covered the
subject's in-depth theoretical aspects. The natural resources depletion by excessive use has become a significant global
issue. Furthermore, alternative energy sources have gained great attention globally to promote the environmental

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sustainability. Enormous empirical papers have demonstrated the importance of renewables in reducing contamination of
the environment (Akadiri, Adebayo, Asuzu, et al., 2022; Miao et al., 2022; Onifade et al., 2022; Shahbaz et al., 2013; Shang
et al., 2022a). The paper of (Miao et al., 2022) on the influence of REC in carbon neutrality in a Newly industrialized nation
argued that environmental sustainability is caused by increment in REC. Similarly, Yunfeng Shang et al. (2022) study on
the REC-environment nexus in ASEAN nations using data from 1990 to 2018 contended that a 1% upsurge in REC triggers
ecological quality. Likewise, (Kirikkaleli & Adebayo, 2021) used (DOLS) model to evaluate the nexus between REC and
environmental quality using data from 1990 to 2018; the study outcome disclosed that REC boosts ecological integrity. In
the same vein, (Awosusi et al., 2022) examined the REC-ecological sustainability nexus in BRICS using data between 1990
and 2018. The authors argued that REC plays a significant role in the carbon neutrality target. On the contrary, the study
of (Akadiri, Adebayo, Asuzu, et al., 2022), using the quantile approach for the case of China, reported that in the lower and
middle quantiles, REC amplified the deterioration of the environment. Likewise, the adverse effect of REC on
environmental quality is reported by the study of (Alola et al., 2019) in China using data from 1990 to 2018 and a quantile
approach.

Significant papers have been researched on the association between environmental quality, non-renewable energy (NREC)
and economic growth (GDP). For instance, the study of (Adebayo et al., 2022) in Russia on the drivers of environmental
quality using data from 1990Q1 to 2019Q4 argued that both NREC and GDP lessen environmental quality in each quantile
using the quantile approach. Similarly, using the dual adjustment approach, the study of (Akadiri, Adebayo, Riti, et al.,
2022) in India utilizing data between 1980 and 2019 contended an upsurge in NREC and GDP causes a decrease in
environmental quality. Likewise, (Dogan & Seker, 2016) scrutinized the ecological sustainability determinant in European
Union using data from 1990 to 2016 and argued that both GDP and NREC are critical determinants of ecological quality.
In the same vein, (Chen et al., 2019) study on GDP, NREC, and environmental quality in China documented that GDP and
NREC decrease environmental quality in China. Using data from 1970 to 2016, (Zaidi et al., 2018) explored the nexus
between NREC, GDP, and ecological sustainability and their study disclosed that NREC and GDP curb ecological
sustainability.

Based on the study mentioned earlier description, the following viewpoints emerged. The techniques utilized in the
reviewed literature on the effect of energy, economic growth, and external debt on load capacity factor are vector
autoregressive (VAR), spectral causality, Toda Yamamoto causality, dynamic OLS (DOLS), ordinary least square (OLS),
Granger causality, Panel OLS (POLS) and Method of moment quantile regression (MMQR). More precisely, Yulong Chen
Zheng Wang Zhangqi Zhong (2019) examined the interrelation among GDP, NREC and environmental quality, while
Adebayo et al. (2022) assessed the nexus among REC, GDP, NREC and environmental quality in NICs. Moreover, (Akadiri,
Adebayo, Riti, et al., 2022) used the quantile approach for China's case on the effect of ED, GDP, NREC on environmental
quality. Overall, our literature analysis reveals that no empirical research has been done using external debt as a
determinant of load capacity factor in BRICS. With regard to the environmental quality metric, the load capacity factor
(hence referred to as LCF) suggested by (Siche et al., 2010) was utilized in this investigation. In this study, the load
capacity facto LCF introduced by (Siche et al., 2010) was used as an environmental quality parameter. Several studies
have employed the LCF as a comprehensive measure of environmental quality (Akadiri, Adebayo, Riti, et al., 2022; Pata &
Balsalobre-Lorente, 2022; Shang et al., 2022b; Xu et al., 2022). Moreover, this indicator represents both the supply and
demand sides of environmental quality, assisting in formulating successful policies. Thus, this paper is the first effort to
fill research gaps by utilizing the LCF as a gauge of environmental sustainability

3. Data And Methods

3.1. Data

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The study objective is to assess the role of nonrenewable energy, external debt, economic progress, and renewable energy
consumption on the load capacity factor in BRICS nations such as Brazil, Russia, India, China and South Africa. The
present work used panel survey data between 1990 and 2018. The endogenous variable is Load capacity factor (LCF)
which is utilized as an environmental quality proxy, while the exogenous variables of this research are external debt (ED),
economic growth (GDP), nonrenewable energy (NREC), and renewable energy (REC). All data were converted into the
logarithm form to remove the scaling variations between the data series. The descriptions of the parameters are shown in
Table 1. Moreover, the brief information on GDP, REC, NREC, ED and LCF are presented in Table 1. Descriptive statistics of
the tested data are presented in Table 2.

Table 1
Variables description and sources of data Source of the data: World- Bank(WB) and OCED, and footprint network
Variable Variable Description

F
Load capacity factor is employed as index to measure the environmental quality. This
lnLC index obtained by dividing bio capacity (per-capita) on ecological footprint

Energy use (kg of oil equivalent per capita)

N REC

Renewable energy share to the total of energy use

REC

GDP (Constant 2010 US dollars)

GDP

ED External debt stocks, total (DOD, current US$)

Table 2
Descriptive Statistics
ED GDP LCF NREC REC

Mean 26.241 27.504 -0.2739 6.9609 2.9320

Median 26.134 27.476 -0.6882 6.8441 3.2332

Maximum 28.304 30.320 1.4990 8.5879 4.0716

Minimum 24.736 25.472 -1.5246 5.8066 1.1570

Std. Dev. 0.7604 1.1599 0.9341 0.8802 0.9628

Skewness 0.5233 0.3798 0.6579 0.5265 -0.6471

Kurtosis 2.7472 2.7559 1.9892 2.0451 2.0943

3.2. Model Erection

To evaluate the role of ED, NREC, GDP and REC on LCF the study economic function is presented as follows:

LC F it = f (GDP it , REC it , N REC it , EDit ) (1)

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Where i reveals BRICS nations, t denotes the timeframe between 1990 and 2018. LCF, ED, REC, NREC and GDP denotes
load capacity factor, external debt, renewable energy, nonrenewable energy and economic growth. The examined model is
derived from the economic function as follows:

LC F it = β + θ1 GDP it + θ2 REC it + θ3 N REC it + θ4 EDit + πit (2)

0

Where β0 and θ1 denote the intercept slope … … . . θ4 represents the coefficients of the independent variables.
Furthermore, π depicts the disturbance term.
3.3. Eestimations Strategy
3.3.1. Cross-section dependency (CD)
The research begins the investigation by determining if cross-section independence or dependence is present. This test
offers guidelines for selecting the best nonstationary test from the first to second generation to address the CD problem.
Before evaluating more panel data estimations, CD must also be treated as a key issue and rectified. Otherwise, there is a
strong likelihood that the research would provide inaccurate or deceptive results (Awosusi et al., 2022; Chien et al., 2022).
The research used the (Pesaran, 2015) test to identify CD problems.
3.3.2. Unit root test
Assessing if the data has a unit root is the next step. Several methods to evaluate the panel data's nonstationary
properties are mentioned in the currently available literature (Balsalobre-Lorente et al., 2018). Due to the potential of each
generation test to address a distinct set of econometric problems in various contexts, the stationarity test for panel data
has been split into 2 generations. For example, homogeneous panel data (Levin et al., 2002) and heterogeneous panel
data (first-generation nonstationary tests) both reveal the unit root (Im, Pesaran, Shin, 2003). Nevertheless, CD problems
could not be handled by the ist-generation nonstationary tests. In contrast, the (Pesaran, 2007) test, which is from the 2nd
generation, is thought to be the best method for dealing with problems like slope parameter heterogeneity (SH) and CD.
3.3.3. Panel cointegration test
Finding slope heterogeneous (SH) comes after determining whether or not the data include a unit root. The current paper
uses the (Hashem Pesaran & Yamagata, 2008) test for this aim. The Ha posits the absence of slope homogeneity,
whereas the Ho supports its presence. The study used the cointegration proposed by (Westerlund, 2007) to assess the
cointegration among parameters. These tests are designed to determine whether there is a long-term relationship between
variables like GDP, NREC, REC, and TEC and LCF.
3.3.4. AMG and CCEMG Estimators
The augmented mean group (AMG) estimator suggested by (Teal & Eberhardt, 2020) and the common correlated effects
mean group (CCEMG) estimate developed by (Pesaran, 2006) are used to analyze long-run effects in panel regression
analysis defined by CD and SH. First-order difference OLS is used to estimate a pooled regression model that has been
enhanced with year dummies for the AMG estimator. The year dummy coefficients are then used to create a new
parameter representing the general dynamic process. To account for time-invariant fixed effects, the newly created
variable is added as an additional regressor distinct from the intercept in each group-specific regression model. The
estimating method uses the two-stage process depicted below:

T
First Phase:Δyit = β ΔXit + ∑
i t=2
ct ΔDt + eit → ĉ t ≡ v̂ t (3)

Second Phase: yit = δi +βi Xit +di v̂ t +eit ,β

ˆ
AM G
= N
−1 ˆ
∑ β (4)
i

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Conversely, the CCEMG estimator allows for heterogeneous impacts among panel members and time-variant
unobservables with CD (Pesaran, 2006). When using unit by unit OLS regressions, the CCEMG approach mandates the
inclusion of the cross-section mean values of the regressors and regress as additional explanatory variables. The CCEMG
technique is resilient to unit roots, structural breaks, non-cointegrated common components, and some serial correlation,
and it has acceptable small sample features. Additionally, it is a reliable estimator of short-run dynamics (Kapetanios et
al., 2011). The slope coefficient for the ith country's CCE estimate is displayed below:

−1
− −
ˆ
β = (E′i M Ei ) E′i M Yi (5)
C C E,i

−1
− − − − − − − −
′
Where: M = IT − H (H ′ H ) , ,
H H = (τ , Z) τ = (1, … , 1) and Z depicts a Tx2 matrix of observations on
−

Z t , t = 1, … , T .

The average of the individual CCE estimates provided as the CCEMG estimator is:

N
1
ˆ ˆ
β = ∑β (6)
MG C C E,i
N
i=1

4. Empirical Findings
4.1 Unit root and cross-sectional dependence assessments
The present paper employed some of the standard preliminary assessments to assess the characteristics of the focused
variables before estimating unknown parameters. The paper employed CIPS and CADF unit root statistical assessments
in this respect. The outcomes unit roots assessments (CIPS and CADF) are reported in Table 3. The outcomes showed
that the focused variables are not stationary at the level. At the same time, the outcomes affirmed that the focused
variables are stationary at first difference operation. The paper utilized the CD assessments to evaluate cross-sectional
dependence within the assessed variables. The outcomes of this assessment are reported in Table 4. The empirical
findings showed that the focused variable has significant differences across panels at a 1 statistical significance level.

Table 3
CIPS and CADF Test Outcomes
Variables CIPS Outcomes CADF Outcomes

I(0) I(I) I(0) I(I)

LCF -1.868 -4.303* -2.043 -4.143*

GDP -0.481 -4.305* -1.652 -4.305*

ED -2.113 -5.072* -1.581 -4.960*

NREC -2.091 -4.514* -1.926 -4.514*

REC -2.169 -4.261* -2.140 -4.261*

Note: * depicts 1% level of significance

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 Table 4: CD Results

Variable CD-test p-value corr abs(corr)

LCF 9.44 0.000 0.555 0.579

GDP 6.02 0.000 0.354 0.459

ED 15.95 0.000 0.950 0.950

NREC 12.30 0.000 0.722 0.722

REC 10.10 0.000 0.593 0.593

On the other hand, the current paper utilized the slope heterogeneity assessment as introduced by Pesaran and Yamagata
(2008). The outcomes of this assessment (Table 5) illustrated that values of both delta and modified delta are significant
at % level. The findings of slope heterogeneity assessment confirmed the dismissal of the null hypothesis of
homogeneous slope coefficients, meaning that slope heterogeneity is an issue in the tested countries. The different
economic structures of the BRICS countries might be one reason for the slope heterogeneity. It also suggests the
interrelation of the BRICS nations, with a shock in one nation having ramifications in others.

To reinforce that there is co-integration amid the focused variables, the paper employed the westerlund cointegration
assessment. The outcomes of this assessment (Table 6) reported that null hypothesis of "there is no co-integration" is not
accepted. Thus, the outcomes of this assessment affirmed that there is cointegration amid the focused variables.

Table 5: Slope Heterogeneity Test Outcomes

ˆ ˆ
Δ ˆ
Δ adjusted

8.399* 9.253*

Note: * depicts a 1% level of significance

Table 6: Westerlund Cointegration Outcomes

Statistics Value Z-value p-value Robust P-value

Gt -2.695 -2.151 0.016 0.000

Ga -12.004 -1.501 0.067 0.000

Pt -8.939 -3.811 0.000 0.050

Pa -15.329 -3.916 0.000 0.000

4.2 Panel estimation results

After affirming that the focused stationary and co-integration among tested variables are valid, the current paper
employed CCEMG and AMG testing model. The empirical findings of CCEMG and AMG tests are reported in Table 7. The
outcomes demonstrate that GDP negatively and significantly affect LCF in BRICS nations. A 1% increase in GDP
decreases LCF by 0.00877% and 0.00469% in CCEMG and AMG testing model respectively. These findings showed that

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an increase in GDP affected negatively the environmental quality in BRICS countries over the examined period. These
findings are constant with Adebayo et al.,( 2022) who found the NREC and GDP has negative influence on the level of
environmental suitability. Furthermore, the empirical findings of CCEMG and AMG tests showed that REC positively and
significantly affects LCF in BRICS nations. A 1% increase in REC promotes LCF by 0.09085% and 0.0576% in CCEMG and
AMG testing models, respectively. These findings affirmed that an increase in REC influences reinforces the environmental
quality in BRICS countries. These findings are constant with Akadiri, et al., (2022), Pata and Balsalobre-Lorente, (2022),
and Shang et al., (2022) who approved the REC positively promote the environmental sustainability.

In contrast, the findings showed that NREC adversely influences LCF. A 1% increase in NREC decreases LCF by 0.49904%
and 0.7875% in CCEMG and AMG testing models, respectively. These findings affirmed that an increase in NREC
adversely influences the BRICS's environmental quality. These findings are constant with Pata and Samour(2022) who
found the NREC has adverse influence on the LCF. In addition, the findings from the CCEMG and AMG testing model
reported that the external debt adversely influences LCF in BRICS nations. The outcomes showed that a 1% increase in the
level of external debt decreases LCF by 0.13044% and 0.01667% in CCEMG and AMG testing model respectively. These
findings affirmed that an increase in the external debt negatively affected lCF in BRICS countries. Hence, the findings
provide empirical evidence that an increase in external debt negatively impacts a sustainable environment. However, the
study provides the first empirical evidence to the energy and environment literature that external debt has a powerful to
promote the environmental sustainability based on LCF factor.

Table 7
Long-run Estimators (CCEMG and AMG) Results
CCEMG AMG

GDP -0.00877 -0.00469

(-2.107)** (-2.183)**

ED -0.13044 -0.01667
(-1.904)* (-3.374)*

NREC -0.49904 -0.7875

(-2.903)* (-2.780)**

REC 0.09085 0.0576

(2.159)** (1.982)***

C 1.1533 2.2169
(1.740) (5.074)

Note: ***, ** and * presents the 10%, 5% and 1% level of significance. Values inside ( ) depicts the Z-statistics

4.3 MMQR Results

The paper employed the MMQR testing approach to provide strong empirical evidence among the focused variables. The
findings of MMQR (Table 8) showed that GDP adverse influent on promoting the LCF in BRICS nations over the examined
period. For all quintiles (1–8), the findings significantly show that GDP coefficient is negative. While in quantile (9), the
findings show that GDP coefficient is negative and insignificant. However, the findings showed that GDP's negative and
significant impact on LCF decreased from 0.2270% in quintile (1) to 0.0030% in quintile (8).

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In addition to that, the findings reported that REC has a positive influence on LCF in BRICS nations. For all quantiles
(Lower, middle, and higher quantiles), the findings clearly demonstrate that there is an upsurge in REC from quantile 1 to
9. In this context, the results showed that the effect of REC increased from 0.453% in quintile 1 to 1.101% in quintile (9);
these findings affirm a significant effect of REC on LCF in BRICS nations. In contrast, the findings reported that NREC
negatively influences LCF in BRICS nations. For all quantiles (Lower, middle, and higher quintiles), the findings clearly
demonstrate an upsurge in NREC from quantile 1 to 9. In this context, the outcomes showed that the effect of NREC
increased from 0.981% in quintile 1 to 1.257% in quintile (9); these findings affirm a significant effect of NREC on LCF in
BRICS nations. On the other hand, the empirical outcomes of MMQR illustrate that external debt has an adverse impact on
the environmental quality in BRICS nations. The findings showed that coefficients of external debt are significant and
negative through all quantiles (Lower, middle, and higher quantiles). In this context, an increase in external debt
significantly decreases the environmental quality.

Table 8
Method of Moment Quantile Regression Outcomes
Lower Quantiles Middle Quantiles Higher Quantiles

0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9

GDP -0.2270 -0.1936 -0.1753 -0.1467 -0.0833 -0.0376 -0.0239 -0.0030 0.0062
(-3.841)* (-3.782)* (-3.640)* (-3.301)* (-3.075)* (-2.862)* (-2.468)** (1.996)** (1.692)

ED -0.3802 -0.3735 -0.3698 -0.36416 -0.3514 -0.34231 -0.3395 -0.3353 -0.3335

(-3.983)* (-4.193)* (-4.304)* (-4.448)* (-4.554)* (-4.420)* (-4.358)* (-4.209)* (4.139)*

NREC -0 .9811 -1.0207 -1.0424 -1.0763 -1.1514 -1.2056 -1.2218 -1.2466 -1.2576

(10.98)* (11.29)* (-12.04)* (-12.08)* (-14.24)* (-14.99)* (-15.89)* (-15.57)* (-15.61)*

REC 0.4563 0.5355 0.5799 0.6468 0.7975 0.9058 0.9387 0.9880 1.0101
(4.4.59)* (5.627)* (6.182)* (6.531)* (8.610)* (10.06)* (11.54)* (12.038)* (12.153)*

C 7.0264 5.6336 4.8675 3.67399 1.0237 0.8833 1.4548 1.1830 0.936

(5.591) (4.220) (3.963) (3.263) (2.964) (2.620) (2.108) (1.739) (1.489)

Note: ***, ** and * presents the 10%, 5% and 1% level of significance. Values inside ( ) depicts the Z-statistics

4.4 Dumitrescu and Hurlin (2012) Causality

Finally, the heterogeneous causality approach, as suggested by Dumitrescu and Hurlin (2012), is applied to assess the
causality interrelation among the focused variables of the current paper. The empirical findings of the heterogeneous
causality approach (Table 9) demonstrated that the -directional cause-and-impact interrelation is ascertained amid GDP,
REC, NREC, external debt, and LCF in BRICS nations over the focused period. These outcomes affirmed findings CCEMG
and AMG and MMQR models.

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 Table 9
Dumitrescu Hurlin Panel Causality Test Outcomes
Null Hypothesis W-Stat. Zbar-Stat. Prob.

5.44789 2.96902 0.0030

NREC ≠ LCF

4.14235 1.77394 0.0761

LCF ≠ NREC

5.31427 2.84671 0.0044

REC ≠LCF

1.35315 -0.77927 0.4358

LCF ≠REC

4.29557 1.91419 0.0556

GDP ≠LCF

3.66899 1.34063 0.1800

LCF ≠GDP

5.92605 3.39546 0.0007

ED ≠LCF

4.87669 2.43739 0.0148

LCF ≠ED

Note: **, ***means the significance of the tested variables at 10%, 5% levels, respectively

5. Discussion Of Findings
The prime objective of the current paper is to provide novel empirical evidence to the current literature by assessing the
interrelation among renewable and nonrenewable energy, GDP, and external debt on the environmental sustainability in
the BRICS countries. In this context, the current paper used LCF as a novel proxy to capture environmental sustainability.
This proxy is employed to capture environmental sustainability owing to its comprehensiveness and completeness. In
addition, the present paper employed a novel statistical approach, namely the MMQR approach, to assess the linkage
among the focused variables. The MMQR approach helps uncover the covariance effects under conditional heterogeneity
as a primary determinant of the LCF. In addition, the MMQR approach allows the individual effects to influence the whole
distribution.

The current paper illustrates that REC positively impacted the LCF in BRICS nations. In contrast, the findings illustrate that
NREC adversely impact the LCF factor. These findings affirmed that REC has a powerful influence on promoting
environmental sustainability in BRICS nations. At the same time, NREC has an adverse influence on the level of
environmental sustainability. Moreover, the findings illustrate that GDP adversely impacted the LCF in BRICS nations.
Thus, GDP affected negatively the environmental sustainability in BRICS nations. These findings can be attributed that
the BRICS countries have reported significant economic development over the period from 1990–2018. In this regard,
these nations comprise around 42% of the world's population and approximately 21% of the world's total gross domestic
product (GDP). In addition, the BRICS nations consumed around 40% of total energy in the world and released 42% of
global CO2 emissions. On the other hand, the environmental degradation issue is still a considerable challenge in these
countries.

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On the other hand, the findings illustrate that external debt adversely impacted the LCF in BRICS nations. Thus, an
increase in external debt negatively affected the environmental sustainability in BRICS nations. These findings can be
attributed that the external debt in BRICS nations increased significantly from 1990 to 2018, from 494.63 billion USD in
1980 to 4250.59 billion US Dollars in 2018. The enormous increment in external debt in BRICS nations can be attributed to
the decline in government revenues and cash flow. However, along with significant external debt in BRICS nations, as
mentioned above, there has been a significant increase in the economic development in these nations over the tested
period. In this case, the study suggested that external debt affected environmental sustainability through the GDP
channel. In this context, Chen and Li (2019) suggested a positive link between debt and economic growth in China.
Saxena and Shanker (2018) affirmed that external debt positively affected India's GDP. Butts (2009) found similar results
in Brazil. However, the study suggests that the external debt in BRICS nations is used to finance fossil fuel investment and
consumption. In turn, this negatively affected the sustainability of BRICS nations; it suggested that those BRICS
policymakers must use the external debt to finance green energy investment to promote environmental sustainability.

6. Conclusion & Policy Implications

Environmental quality challenges such as contamination and unclean conditions have been worldwide concerns in recent
years in order to attain sustainable development goals. Various variables that promote or degrade environmental quality
have been found in the extant literature. The primary objective of this paper is to evaluate the influence of REC, GDP,
NREC, and ED in improving LCF (environmental quality proxy) in BRICS nations. The research used sophisticated panel
data estimates that can handle CD and SH issues to assess the long-run relationship between the indicators. Furthermore,
the study utilized MMQR to capture the association at different quantiles. The current paper illustrates that REC positively
impacted the LCF in BRICS nations. In contrast, the findings illustrate that NREC adversely impacts the LCF factor. These
findings reinforced that REC has a positive, powerful influence on promoting environmental sustainability in BRICS
nations. In comparison, NREC has an adverse influence on the level of environmental sustainability. Moreover, the findings
illustrate that GDP adversely impacted the LCF in BRICS nations. Thus, GDP negatively affected the environmental
sustainability of BRICS nations. Furthermore, the MMQR results support both CCEMG and AMG long-run estimators.
Finally, the heterogeneous causality approach, as suggested by Dumitrescu and Hurlin (2012), is applied to assess the
causality interrelation among the focused variables of the current paper. The empirical findings of the heterogeneous
causality approach demonstrated that the -directional cause-and-impact interrelation is ascertained amid GDP, REC, NREC,
ED, and LCF in BRICS nations over the focused period

The outcomes of the present paper introduce important implications to policymakers as follows: Firstly, the BRICS
policymakers should design new policies to promote environmental sustainability by reinforcing efficiency of energy
systems and increasing the level of green energy investment. Secondly, the existing paper suggests that BRICS nations
must design strategies to promote green economics and investment to limit the negative impact of GDP on environmental
sustainability. Thirdly, for BRICS nations to realize their investments in renewables more sustainably, the study suggests
that the BRICS policymakers must revise the current economic growth model by reformulating the policies of external debt
to decrease the adverse impact of external debt on external debt on environmental sustainability. This could potentially be
achieved by deleting any restrictions on foreign investment. Therefore, the empirical outcomes of this paper present
valuable suggestions for BRICS policymakers heading to a green economy. In this sense, the present study proposes that
the BRICS policymakers adopt strategies to promote environmental sustainability through efficient energy utilization
channels and investment incentives programs in grean energy investments. In addition, the study suggests that BRICS
policymakers must use the external debt to finance green energy investment to promote environmental sustainability.

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Figures

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Figure 1

External debts in BRICS rations over the period from 1990-2018

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