Exploring the influence of trade openness, energy consumption, natural resource rents, and human capital in achieving carbon neutrality

doi:10.1016/j.regsus.2025.100247

Abstract

Abstract:

Addressing the pressing challenges of climate change and global warming requires a strong commitment to reducing carbon dioxide (CO₂) emissions and achieving carbon neutrality. Efficient energy use and international trade play crucial roles in promoting sustainable development and enhancing environmental quality. This study investigated the relationships of CO₂ emissions with trade openness (export and import), energy consumption (renewable energy consumption and fossil fuel consumption), natural resource rents, and human capital across 20 developing countries (Brazil, Iran, Russia, China, Malaysia, Saudi Arabia, Colombia, Mexico, South Africa, Costa Rica, Morocco, Tunisia, Egypt, Pakistan, Türkiye, India, Peru, Viet Nam, Indonesia, and Philippines) from 1990 to 2022 using the augmented mean group (AMG) and common correlated effects mean group (CCEMG) methods. The findings revealed that export, renewable energy consumption, and human capital significantly reduce CO₂emissions, while import, fossil fuel consumption, and natural resource rents increase CO₂ emissions, although the effect of natural resource rents is statistically insignificant. Causality tests indicated the bidirectional relationship of CO₂emissions with export, import, renewable energy consumption, and fossil fuel consumption, and the unidirectional causality from human capital to CO₂emissions. CO₂ emissions drive the greenhouse effect, thereby raising global temperature and accelerating climate change. As reducing CO₂ emissions becomes an urgent global priority, this study provides actionable insights by identifying key variables that mitigate emissions and enhance sustainability. By bridging research and policy, this study offers targeted recommendations to accelerate progress toward a low-carbon future.

Key words: Trade openness CO₂ emissions, Renewable energy consumption, Climate change, Augmented mean group (AMG), Common correlated effects mean group(CCEMG)

Olani Bekele SAKILU, CHEN Haibo. Exploring the influence of trade openness, energy consumption, natural resource rents, and human capital in achieving carbon neutrality[J]. Regional Sustainability, 2025, 6(4): 100247.

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Variable	Abbreviation	Description	Unit	Supporting literature	Data sources
CO₂ emissions	CO₂		t	Huang et al. (2023); Obobisa and Ahakwa (2024)	World Development Indicators (2024)
Export	EXP	Percentage of export of goods and services in the gross domestic product (GDP)	%	Mahmood (2023); Wang et al. (2024c)	World Development Indicators (2024)
Import	IMP	Percentage of import of goods and services in the GDP	%	Mukhtarov et al. (2022); Safi et al. (2023)	World Development Indicators (2024)
Renewable energy consumption	RNE	Percentage of renewable energy consumption in the total energy consumption	%	Amin and Song (2023); Zhou et al. (2024)	World Development Indicators (2024)
Fossil fuel consumption	FEC	Percentage of fossil fuel consumption in the total energy consumption	%	Raghutla and Chittedi (2023); Zhou et al. (2023); Sakilu and Chen (2025)	World Development Indicators (2024)
Natural resource rents	NR	Percentage of the total natural resource rents in GDP	%	Zhang et al. (2023); Ghazouani and Maktouf (2024)	World Development Indicators (2024)
Human capital	HC	Years of education received	a	Jahanger et al. (2023); Payab et al. (2023)	Penn World Table (PWT) (https://www.rug.nl/ggdc/productivity/pwt/pwt-releases/pwt100)

Variable	Mean	Standard deviation	Minimum	Maximum	Skewness	Kurtosis
lnCO₂	12.119	1.576	7.962	16.208	0.027	3.162
lnEXP	3.265	0.539	1.907	4.798	0.301	3.218
lnIMP	3.300	0.487	1.940	4.611	0.399	3.201
lnRNE	2.455	1.850	-4.605	4.329	-2.413	9.154
lnFEC	4.330	0.235	3.289	4.605	-0.966	3.851
NR	0.805	1.181	0.000	8.809	2.695	14.146
HC	2.301	0.437	1.327	3.434	0.084	2.656

Variable	lnCO₂	lnEXP	lnIMP	lnRNE	lnFEC	NR	HC	VIF	Tolerance value
lnCO₂	1.000
lnEXP	-0.172	1.000						1.27	0.79
lnIMP	-0.357	0.900	1.000					1.01	0.99
lnRNE	-0.237	-0.312	-0.115	1.000				1.91	0.52
lnFEC	0.357	0.232	0.133	-0.646	1.000			1.75	0.57
NR	0.025	0.280	0.170	-0.307	0.168	1.000		1.24	0.81
HC	0.231	0.372	0.220	-0.171	0.187	0.335	1.000	1.25	0.80

Test	Variable	Statistic value	Correlation coefficient
Cross-sectional dependence test	lnCO₂	63.34^***	0.80
	lnEXP	16.83^***	0.21
	lnIMP	10.92^***	0.14
	lnRNE	35.84^***	0.45
	lnFEC	23.93^***	0.30
	NR	29.14^***	0.37
	HC	75.63^***	0.96
Slope heterogeneity test	$\bar{\Delta}$	27.69^***	-
Slope heterogeneity test	$\bar{\Delta}_{a d j}$	31.82^***	-

Variable	CADF		CIPS
Variable	At the level	At the first difference	At the level	At the first difference
lnCO₂	-2.396	-3.623^***	-2.131	-4.980^***
lnEXP	-2.599	-3.876^***	-1.625	-5.155^***
lnIMP	-2.702^**	-3.967^***	-1.938	-4.782^***
lnRNE	-2.267	-4.010^***	-1.929	-5.212^***
lnFEC	-2.096	-4.506^***	-2.391	-5.555^***
NR	-2.407	-3.859^***	-1.757	-3.730^***
HC	-2.011	-3.619^***	-1.538	-5.268^***