Nexus between disaggregated energy sources, institutional quality, and environmental degradation in BRI countries: a penal quantile regression analysis

The present study aims to contribute to the existing literature by examining the role of institutional quality in the nexus of disaggregated energy sources and environmental degradation for belt and road initiative countries. To empirically support the theoretically presented propositions, a series of analytical techniques are used, such as LLC, IPS for unit root, Johansen-Fisher panel co-integration to check the long-run association between the considered variables from 2000 to 2020. Further, a panel quantile regression and panel fixed effect model is used in the study to explore the nexus. The study found a long-run association between institutional quality (IQ), energy production from oil (EPOil), natural gas (EPGas), coal (EPCoal), renewables (EPRenew), and CO2 emission in BRI countries. According to panel unit-root tests, all variables are integrated of order I(1), and the panel co-integration test showed a log-run association among variables. The results of panel quantile regression and panel fixed effect model showed a positive association between IQ and CO2 emission. Similarly, an association of CO2 emission with EPGas, EPOil, and EPCoal is also significantly positive. The extraction and use of fossil fuels (natural gas, oil, and coal) pollute the air, while, on the other hand, there is a negative relationship found between CO2 emission and EPRenew. When developing environmental protection measures, governments should choose to concentrate on the quality of institutions. The effectiveness of institutions in BRI countries will provide appropriate rules, regulations, property rights, and methods to fight corruption, which, if followed systematically, would decrease CO2 emissions and enhance the quality of the environment in BRI countries.