A Path to Carbon Neutrality: Do Environmental Tax, Green Technologies and Natural Resources Extraction Matter for Environmental Sustainability?

Mwoya Byaro, Gemma Mafwolo and Anicet Rwezaula

African Journal of Economic Review, 2025, vol. 13, issue 3

Abstract: BRICS countries (Brazil, Russia, China and South Africa) and G-7 countries (Japan, USA, France, UK, Canada, Italy and Germany) have experienced high economic growth while polluting their environment. This study explores how environmental sustainability of these countries can be achieved via environmental technology and renewable energy use. It also shows the uncertainty of environmental tax and natural resources extraction in reducing carbon emissions (i.e. CO2). Unlike previous studies using conventional econometric analysis, we employ novel Bayesian panel regression to analyze data spanning from 1996 to 2021 for twelve countries within the G-7 and BRICS cohorts. The results of Bayesian regression are further verified by using the method of moment quantile regression (MM_QR). The results show that extraction of natural resources (i.e. forest rents, natural gas rents and fossil fuels) and economic growth, contribute to an increase in carbon emissions across these countries. We also observed that implementation of green environmental technology and uptake of renewable energy reduce carbon emissions within these countries. The results further show the uncertainty of environmental tax and other natural resource extraction (i.e. coal rents, oil rents, mineral rents) on minimizing carbon emissions. The study addresses two policy interventions: first, to promote renewable energy and technological innovation in the environmental sector to achieve carbon neutrality. Second, to reduce the effect of natural resource extraction, such as forest and natural gas rents, on increasing carbon emissions. The study offers actionable insights for policymakers in other developing countries to balance economic growth and natural resources extraction with environmental sustainability.

Keywords: Environmental; Economics; and; Policy (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:ags:afjecr:372307

DOI: 10.22004/ag.econ.372307

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