Urbanization, rural energy-poverty, and carbon emission: unveiling the pollution halo effect in 48 BRI countries

The Belt and Road Initiative (BRI) is a significant economic development strategy directed by China. Its primary objective is to establish connectivity across a vast region encompassing over 70 countries in Asia, Europe, and Africa. This endeavor significantly impacts worldwide development, economic advancement, and environmental sustainability. Nevertheless, insufficient pertinent evidence exists when exploring the correlation between urbanization, rural energy poverty (Rural_EP), and carbon emissions (CO2_Em) in the BRI region. The present study examines panel data encompassing 48 countries participating in BRI from 2001 to 2020. This research addresses existing gaps by employing the System-GMM and Driscoll and Kraay Standard Error (DKSE) models to investigate factors influencing CO2_Em. The findings indicate that the presence of energy poverty in rural areas is associated with higher levels of CO2_Em, while urbanization has a mitigating effect on such emissions. Furthermore, adopting production methods and environmentally sustainable technologies by foreign corporations leads to a decrease in CO2_Em, thereby providing evidence of a pollution halo effect in BRI. Moreover, economic growth and industrialization have detrimental environmental consequences, primarily through the amplification of CO2_Em. Based on the empirical evidence, the study proposes policy measures that advocate for promoting renewable energy sources, adopting sustainable urban development practices, implementing energy conservation strategies, and establishing carbon pricing mechanisms.