Regulatory quality and environmental sustainability nexus in D8 countries

Abstract

This study investigates the relationships between regulatory quality, carbon emissions (CO2), renewable energy consumption, and economic growth in D-8 countries (Bangladesh, Egypt, Indonesia, Iran, Malaysia, Nigeria, Pakistan, and Turkey) over the period 2007–2023. Using panel data techniques, long-run relationships are examined through the Pedroni cointegration test, while long-run coefficients are estimated via DOLS and FMOLS. Additionally, the Environmental Kuznets Curve (EKC) hypothesis is assessed using the Kernel Regularized Least Squares (KRLS) method to capture potential nonlinearities. The results indicate that improvements in regulatory quality significantly reduce CO2 emissions, whereas their impact on renewable energy consumption remains limited and heterogeneous across countries. The findings also confirm an inverted U-shaped relationship between income and emissions, supporting the EKC hypothesis. Regulatory quality is found to reduce environmental degradation and contribute positively to environmental sustainability. Energy consumption is found to increase environmental degradation, while trade openness has no significant effect. Overall, the results highlight the critical role of regulatory quality in mitigating emissions and emphasize the need for more targeted and consistent policies to promote renewable energy adoption in D-8 countries.