The New Drivers of CO₂ Emissions in BRIC Countries: Assessing the Role of Economic Policy Uncertainty, Clean Energy Consumption and Financial Development

Rapid economic growth (GDP) and heightened policy uncertainty have intensified environmental pressures in BRIC economies, prompting stricter environmental regulation. This study examines the drivers of ecological degradation in BRIC countries from 1997 to 2024. Per capita CO₂ emissions are the dependent variable, while real GDP per capita, clean energy consumption (CE), the economic policy uncertainty (EPU) index, and bank-based financial development (FD) serve as regressors. Cross-sectional dependence and slope heterogeneity are tested using Pesaran’s CD and delta statistics; integration is assessed with CIPS and CADF unit-root tests; and long-run relationships are evaluated via the Westerlund cointegration approach. Long-run coefficients are estimated with the panel Augmented Mean Group (AMG) estimator, which accommodates common shocks and structural heterogeneity. Results show that GDP increases emissions in all BRIC economies. FD has country-specific effects, either raising or reducing emissions. CE lowers emissions at the panel level, whereas policy uncertainty worsens environmental quality in most cases. The findings support coordinated clean-energy finance, green banking standards, and predictable policy frameworks.