Received: 21 September 2020 Revised: 26 October 2020 Accepted: 10 November 2020

DOI: 10.1002/sd.2151

RESEARCH ARTICLE

The linkages among natural resources, renewable energy

consumption, and environmental quality: A path toward
sustainable development

Muhammad Wasif Zafar1 | Asif Saeed2 | Syed Anees Haider Zaidi3 |

4
Abdul Waheed

1
College of Management, Shenzhen
University, Shenzhen, China Abstract
2
FSM, National University of Computer and The role of education is inevitable in the process of societal reform and achieving
Emerging Sciences, Lahore, Pakistan
sustainable development. Sustainable development remains unachievable without
3
COMSATS University of Islamabad, Sahiwal
Campus, Sahiwal, Pakistan advancing the environmental quality. It is noteworthy to explore the relationship
4
University of Management and Technology, between natural resources, renewable energy consumption, and environmental qual-
Lahore, Pakistan
ity. The current study analyzes the impact of renewable energy use, natural resources
Correspondence abundance, and education on environmental quality by controlling the role of finan-
Syed Anees Haider Zaidi, COMSATS
cial development and economic growth within selected Asian countries from 1990 to
University of Islamabad, Sahiwal Campus,
Sahiwal, Pakistan. 2018. The study focuses on second-generation unit root and co-integration methods
Email: aneeshaider5@hotmail.com
that control the heterogeneity in the data. Empirical results inferred that any expan-
sion in education rate and renewable energy enhances environmental quality. Natural
resource abundance increases the level of carbon emissions. The results of
Dumitrescu and Hurlin panel causality ensure a bidirectional link between financial
development and emissions as well as renewable energy and emissions. The findings
furnish important policy implications by furnishing empirical evidence from Asian
countries.

KEYWORDS

education, environmental quality, natural resources, renewable energy, sustainable

development

1 | I N T RO DU CT I O N development. Air emission control efforts will improve health condi-

A notable challenge for the humans' future is to obtain sustainable
development in distinct fields of life. In 2012, the United Nations laid
down a blueprint for the sustainable development goals (SDGs) to
overwhelm the vibrant global challenges in order to achieve sustain-
able development. The SDGs are composed of 17 separate goals with
169 targets and 232 indicators to manage national along with global
efforts to achieve sustainable development (Mainali, Luukkanen, Sil-
veira, & Kaivo-Oja, 2018). Air quality adds an essential role in achiev-
ing these SDGs, and has gained considerable attention in the present
era. In many ways, air pollution could boost the success of sustainable
tions consequently assist to accomplish the SDGs. In contrast,
because of human activities, air pollution is associated with major
social-economic sectors such as the agricultural, manufacturing, resi-
dential, and transportation sectors (He et al., 2018), which enhance
the GDP of a nation and citizens' wealth. Jones and Klenow (2016)
revealed that GDP, in dimensions such as mortality, inequality, con-
sumption, and leisure is strongly associated with health. But reducing
air pollution often comes at the short-term expense of economic
development.
Carbon emission (CO2) is a widely-used proxy of environmental
quality. In recent times, policymakers, academicians, and researchers

Sustainable Development. 2020;1–10. wileyonlinelibrary.com/journal/sd © 2020 ERP Environment and John Wiley & Sons Ltd 1
2 ZAFAR ET AL.
are inclined to investigate the emission-growth nexus. It has been
demonstrated that CO2 emission is positively associated with eco-
nomic growth and energy consumption (Wang, Wang, Du, Li, &
He, 2020). In the past, several empirical evidence explicated that
energy consumption and economic growth accelerate the carbon
emissions (Akadiri, Bekun, Taheri, & Akadiri, 2019). In world-leading
economies, they sustain the competitive advantage of CO2 emission
reduction by using the most advanced technologies in their energy
sector while it may be hard for developing economies. It is still
required to uncover the factors that influence environmental quality,
that is, renewable energy consumption, natural resources, and educa-
tion from Asian emerging economies.
Environmentalists and policy makers often encourage the replace-
ment of fossil fuels with renewable energy sources. In addition to the
environmental benefits, the use of renewable energies also allows
economies to minimize the reliance on foreign capital and increase
jobs (Yildirim, Saraç, & Aslan, 2012). One requirement for achieving
environmental sustainability is renewable energy (Riti, Song, Shu,
Kamah, & Atabani, 2018). In the period 2008–2017, the contribution
of RE sources in total final energy consumption increased from 10%
to 18.1% (Kusch-Brandt, 2019). According to IRENA projections, this
proportion might be grown to 60% by 2050 (IRENA, 2018). Renew-
able energy sources are predominantly solar (photovoltaic), wind, tidal,
waste and biomass, considered environmentally friendly, and cost-
effective in reducing harmful climate change, mitigating emissions,
providing energy protection, and helping to alleviate poverty by sup-
plying electricity to remote areas because of their decentralized
nature (Gielen et al., 2019). A broad range of studies reported nega-
tive interaction between RE and CO2 (Dong et al., 2018), whereas
some researchers have described the positive relationships (Adams,
Klobodu, & Apio, 2018). Similarly, some authors reported no differen-
tial effects of RE on carbon emissions (Bilgili, Koçak, & Bulut, 2016;
Farhani & Shahbaz, 2014). The conflicting results on the ability of
renewable energies help to minimize pollution and bring sustainable
development (Sarkodie & Adams, 2018). Therefore, this study dis-
cusses RE's impact on environmental quality with the combination of
education and natural resources.
The second aim of the study is to understand the insights on how
environmental quality might be influenced by natural resources. It is
stated that Global Footprint Network (GFN, 2018) compensates the
people for their CO2 emissions by monitoring electricity from the for-
ests, croplands, farmland, pasture, and building land. On the other
hand, certain natural resources such as oil and gas may harm the eco-
system. In an economy, the volume of revenue is directly correlated
with natural resources. In early growth, people consume more energy
and disregard its effect on the environment. However, it begins to
demand a cleaner climate, more energy-efficient goods, and natural
resources security along with a rising quality of life in later stages of
economic development. The efficiency of the atmosphere is starting
to increase which ensures the existence of the Environmental Kuznets
curve (EKC). The abundance of natural resources reduces the reliance
on fossil fuel imports because natural resources are sufficient to meet
and will gradually drop the energy requirements.
The third focus of this study to unveil the role of education in man-
aging environmental quality. Higher levels of educational achievement
have been widely reported as encouraging pro-environmental behavior
(Kotchen, Boyle, & Leiserowitz, 2013; De Silva & Pownall, 2014). The
impact on the environmental standard of education attainment might be
induced by the following factors. First, higher educational achievement
greatly raises income for citizens (Acemoglu & Angrist, 2000; Angrist &
Keueger, 1991). It also enhances the willingness to compensate for envi-
ronmental conservation. Second, higher education experience may raise
people's concerns about protecting the environment (Xiao, Dunlap, &
Hong, 2013). It pays more attention to environmental issues, that is, cli-
mate change and pollution. The whole family could be more likely to
mitigate harmful environmental externality (Zografakis et al., 2010).
According to Grossman and Krueger (1991), environmental education
forces policymakers to establish eco-friendly policies that lead to an
inverted ‘U’ form of the EKC. Thus, education contributes a critical role
in reducing ecological degradation though achieving the SDG targets.
It is crucial to study the Asian emerging economies to collect
more insights about their potential to achieve desirable environmental
and economic objectives by exploring the impacts of renewable
energy usage, natural resources, and education expansion on CO2
emission reduction (improved environmental quality). Since it is men-
tioned in the report (IRENA, 2018), the Asian region is a home for
93 cities out of the top 100 populated cities across the world. Such a
densely populated region has a high capacity to produce their energy
from renewable resources. In 2018, 10 out of 18 countries were pre-
senting their energy from biogas. The solar power generation capacity
increased two times from 2015 to 2018. According to 2019 Asia and
the Pacific renewable energy status report (REN21-Asia), China has
9% renewable share of total primary energy supply (TPES) and 70% of
the total TPES of this region produced in China. In this continent,
Myanmar 57%, Sri Lanka 43%, Pakistan 39%, and India 24% have
renewable shares of total TPES. According to the IRENA (2018), the
Asian continent has a total capacity of renewable power generation
988.9 GW. Therefore, in the Asian region, there is a considerable
potential to shift power generation from fossil fuel and coal; to renew-
able (green) energy sources.
By relying on these facts, it is supposed that the effective usage
of renewable energy and well-educated people in this region may con-
tribute to improve environmental quality. This set of variables has not
been studied before in the existing literature. This study attempts to
fill such literature by investigating the impact of renewable energy
consumption and education on environmental quality. The role of nat-
ural resource abundance for Asian countries is also supposed to be
examined toward environmental quality. To meet such study objec-
tives, continuously-updated and bias-corrected (Cup-BC) and
continuously-updated and fully-modified (Cup-FM) methods were
adopted to calculate the long-run elasticities. Dumitrescu Hurlin panel
causality techniques were employed to confirm the casual association
among the variables.
The remaining sections of this study are structured accordingly
whereby Section 2 describes the concise literature review. Data and
sources are presented in Section 3. In Section 4, adopted
ZAFAR ET AL.
methodology and time series analysis are explained. In Section 5, the
main findings and lines for future research are presented.
2 | LITERATURE REVIEW
The intention of the literature reviews mainly focused on independent
variables with respect to the dependent variable of the study. In this
regard, various studies have probed the impact of natural resource
abundance, renewable energy use, and education on polluted emis-
sions using various econometric methods for time series and
panel data.
2.1 | Nexus between renewable energy use and
environmental quality
Over the past few decades, several researchers have exposed the
nexus between renewable energy (clean energy) and environmental
quality using unlike econometric methods for time series and panel
data. Though most studies reported the positive impact of clean energy
on the environment, a few studies reported the negative association
between two variables. For instance, Farhani and Shahbaz (2014)
examined the link of renewable energy use with polluted air emissions
in MENA countries by controlling other macro-economic factors. The
results of the panel method affirmed the positive linkages between
these two variables in these nations. It implies that renewable energy
share is still not enough that can reduce emissions growth for such
nations. Likewise, Bölük and Mert (2014) also reported for the case of
European Union (EU) that RE does not play any role in controlling CO2
emissions. Subsequently, Bölük and Mert (2015) presented the case of
Turkey and reported a weak negative link of renewable energy use
with carbon emissions. Fuinhas (2017) examined the connection of
renewable energy with emissions for Latin American countries by using
the panel estimations. They suggested that renewable energy in these
countries would be helpful in reducing the level of carbon intensity.
Bulut (2017) divided the use of energy into renewable and non-
renewable and verified the impact of both energies on environmental
quality by controlling the role of other macroeconomic variables from
the domain of Turkey. Surprisingly, the expert reported that the use
of renewable energy enhances the polluting emissions in Turkey.
Sinha and Shahbaz (2018) probed the role of renewable energy to
control air pollution in India. Such authors' ARDL results indicated that
air pollution can be controlled through renewable energy. Similar
results were reported by Zambrano-Monserrate, Silva-Zambrano,
Davalos-Penafiel, Zambrano-Monserrate, and Ruano (2018) for Peru.
By using the data of 25 developing countries, Hu, Xie, Fang, and
Zhang (2018) used the panel co-integration method, and results indi-
cate the negative linkage between RE and GDP. G-7 countries, Cai,
Yan, and Chang (2018) found different results between clean energy
use and air pollution by using the bootstrap ARDL method. By con-
trolling the heterogeneity in the data, Zafar, Anees, et al. (2019) pro-
bed the association among financial development, renewable energy,
3
and emissions for G-7 and N-11 economies. Such outcomes have affi-
rmed the positive impact between renewable energy use and environ-
mental quality. Another study conducted by Zafar, Mirza, Zaidi, and
Hou (2019) using the data for emerging economies and recommended
that these countries could reduce the polluted emission from the air
by higher use of renewable energy. The similar reported by Do
gan,
Driha, Balsalobre Lorente, and Shahzad (2020) for developed coun-
tries. Carlos and Lorente (2020) also reported positive results
between clean energy and emissions intensity.
2.2 | Nexus between education and environmental
quality
A few studies explicitly focused on the role of education for better
environmental quality. However, it is not clear whether education
increases or decreases emissions growth. Williamson (2017) investi-
gated the impact of education and politics on air pollution. He used
two proxies to measure air pollution such as CO2 and NH4. The
results indicate an insignificant impact of education on air quality. Bal-
aguer and Cantavella (2018) were studied the linear and nonlinear role
of education with carbon emissions from Australia by using ARDL
method. His results indicate that inverted U-shaped relationship of
education with emissions growth. Thereafter, by using a similar
approach Bano, Zhao, Ahmad, Wang, and Liu (2018) examined the
impact of human capital on environmental quality for Pakistan.
Human capital was represented through the proxy of education. The
experts used secondary education to measure human capital whereby
results indicate that education plays a key role in controlling the level
of emission.
For G-7 countries, Ahmed, Zafar, and Ali (2020) examined the
relationship among human capital, urbanization, and ecological foot-
print using second-generation techniques. They reported negative link
between human capital and ecological footprint. Zafar, Shahbaz,
Sinha, Sengupta, and Qin (2020) used OECD countries' data to reveal
the role of renewable energy use and education for the betterment of
environmental quality. Such analysis reported that renewable energy
and education play a vital role in improving environmental quality.
Recently, Mahalik, Mallick, and Padhan (2021) used primary and sec-
ondary school enrolment proxies to measure the education and exam-
ine the link with carbon emission for BRICS. They reported that
primary education increases CO2 emissions whereas secondary edu-
cation reduces carbon emissions.
2.3 | Nexus between natural resources and
environmental quality
Using the data of five EU countries, Balsalobre-Lorente, Shahbaz,
Roubaud, and Farhani (2018) probed the impact of renewable energy
use and natural resources on environmental quality between the
period of 1985 and 2016. Such scholars used a panel data approach
to estimate long-run results and concluded that the use of renewable
4 ZAFAR ET AL.
energy and natural resources improves environmental quality. Zafar,
Shahbaz, Hou, and Sinha (2019) tested United States' data to explore
the effect on the ecological footprint of natural resources and FDI. To
that end, authors have been used the ARDL method. Such studies
have established negative relations between natural resources and
environmental impact. It is found by such studies that the control of
natural resource waste by educating people to adjust their consump-
tion behaviors, reducing fishing and deforestation, making vigilant
usage of water and energy resources as well as using energy-efficient
fine goods in everyday lives. Bekun, Alola, and Sarkodie (2019) found
the nexus among natural resources rent with carbon emissions for
16 EU countries using balanced panel data. The PMG-ARDL method
results suggested that natural resources rent increases emissions
intensity in such counties.
Likewise, Danish, Baloch, Mahmood, and Zhang (2019) reported
that the abundance of natural resources in BRICS countries reduces
environmental degradation except for India. Experts recommended
that allowing the regeneration of natural resources combined with
artificial resources to reduce environmental degradation. It is further
argued that the transition from outdated technologies to advancing
technologies combining recycling, reprocessing, creativity, and added
value will contribute to economic growth and to improve environmen-
tal quality. A study of Wang, Vo, Shahbaz, and Ak (2020) has recently
examined the impact of natural resource and agriculture value-added
on emissions within G-7 countries. To this end, experts adopted CS-
ARDL methods for estimations. The long-run results ensured that nat-
ural resources increase emissions in such a group of countries. Using
the data for Belt & Road Initiatives countries, Hussain, Khan, and
Zhou (2020) used Augmented Mean Group (AMG) methods to deter-
mine the nexus among natural resources, polluted emissions, and
energy use. The results depicted that the level of carbon emissions
increases with the increase in the depletion of natural resources.
3 | THEORETICAL FRAMEWORK
AND DATA
The debate on sustainable development was preliminarily initiated by
Keeble & Brian R. (1988). Subsequently, several policy makers and inter-
national organizations have studied such concepts (França, Broman,
Robèrt, Basile, & Trygg, 2017; Zhang et al., 2015). Over the past few
decades, diverse scholars, international arbitration, and charters have con-
firmed the importance of education in achieving the sectional dependence
(SD) objectives (Seelos & Mair, 2004). McKeown, Hopkins, Rizzi, and
Chrystalbridge (2002) also advocated about the fundamental position of
education in SD and stated that sustainable development education (SDE)
is essential in solving the problem of unsustainability.
It is imperative to state the role of education in reducing environ-
mental degradation. It is advocated by the experts that the decrease in
the atmosphere is due to an increase in environmental issues (Sinha &
Shahbaz, 2018). Likewise, the increase in environmental awareness
leads to an increase in the level of education that might be evaluated by
the education of the community. It is essential to meet legal
requirements and must aware of the sustainability of economic growth
that can be at risk. It is noteworthy to acknowledge the role of educa-
tion. In this respect, it is notable to explore the role of public-private
partnerships in promoting citizens' environmental consciousness. In
order to enable this relationship, the education system must claim envi-
ronmental sustainability motives. Therefore, education along with envi-
ronmental awareness should be taught in the high school curriculum
because of a clear understanding of energy conservation and environ-
mental security for the nations. By doing so, it might enrich society's
level concerning to education system. It can also be argued that the use
of renewable energy and education is projected to adversely affect car-
bon dioxide emissions, while available natural resources and economic
development can have a beneficial environmental influence.
There are various ties between renewable and carbon emissions in
recent studies. For instance, Bekhet and Othman (2018) has confirmed
that renewable energy plays an important role in Malaysia's sustainable
growth by decreasing the CO2 emissions, since the relation of two fac-
tors is negative. In comparison, Adams and Acheampong (2019) con-
cluded that, in 28 African countries, both renewable as well as
conventional energy usage are growing CO2 emissions. Therefore,
more studies are required to understand the additional insights regard-
ing environmental quality and renewable energy globally.
In the present situation, global resource demand raised the point
where demand has surpassed on earth (Haberl et al., 2007). The grow-
ing production of natural resource, including fossil fuels, biomasses,
mineral, and metals are hard to substitute (Krausmann et al., 2009).
Significantly higher food intake by capital whereas forest depletion in
the tropical areas were observed more rapid relatively than growth
over the past 40 decades (UNEP, 2007). This study explores the
impact of renewable energy use, education, and natural resource
abundance on polluted emissions by controlling the role of income
and financial development. The augmented function of CO2 emission
is presented in Equation (1).
CO2 = f ðFD, Y, NR, E, REÞ, ð1Þ
where, CO2 represents carbon emissions, FDdenotes financial devel-
opment, Y shows income level, NR indicates natural resources abun-
dance, E means education, and RE symbolizes renewable energy use.
This study adopts a natural logarithm for entire variables to reduce
the sharpness in the data, multicollinearity, and to get free from
heteroscedasticity.
The variables were log-transformed whereas interpretation
regarding each estimated coefficient will observe based on elasticity's
point. Besides, the results look more efficient and consistent owing to
the adoption of log-linear transformation rather than using a simple
linear transformation. The log-linear function of CO2 emissions is
presented in Equation (2).
lnCO2,it = β0 + β1 lnFDit + β2 lnY it + β3 lnNRit + β4 lnEit + β5 lnREit + εit , ð2Þ
where ln is explained natural logarithm, i represents cross-section
included in the panel data (1, 2, 3, …, 15), t indicates a period of the
ZAFAR ET AL. 5

study (1990–2018), β0defines the constant term of the model, and β1,
β2,β3, β4, and β5 represent the coefficient of financial development,
income, natural resources abundance, education, and renewable
energy use, respectively.
The list of the selected countries includes Bangladesh, Cambodia,
China, India, Indonesia, Iran, Japan, South Korea, Malaysia, Nepal,
Pakistan, Philippines, Sri Lanka, Thailand, and Vietnam. Data were used
annually for the period 1990–2018. The variables are measured such as
carbon emissions (in metric tons), renewable energy consumption (mil-
lion-kilowatt hours), gross domestic product (constant US dollar 2010),
education (total secondary school enrollment), financial development
(private sector domestic credit percentage of GDP), and abundance of
natural resources (percentage of GDP). Renewable energy use is hydro-
electric, biomass, solar, wind, sea, waste, biomass, and geothermal. The
variables were used in the form of capita. Renewable energy consump-
tion data is collected from the Energy Information Administration
(EIA, 2019). We collected the date of rest variables such as income, car-
bon emissions, education, financial development, and natural resources
from the World Development Indices (World Bank, 2019).
Pagan (1980) and Pesaran CD test proposed by Pesaran (2004). The
results of these tests are summarized in Table 2.
The null assumption of cross-sectional independence is rejected
in all three tests and we accept the alternative hypothesis that infers
the presence of cross-sectional dependence among the study
variables.
4.2 | Second generation unit root tests
In the energy-economic literature, the second-generation unit root
tests have gained pertinent significance, as cross-sectional depen-
dence testing has failed in the first-generation units. The purpose of
this study is to examine the stationary properties of the variables
described through cross-sectional Augmented IPS (CIPS) and cross-
sectional Augmented ADF (CADF) approaches. Furthermore, by using
the appropriate unit root tests with cross-sectional dependency
within a panel data, the reliability of the results increases. The results
of unit root tests are presented in Table 3.

4 | RESULTS AND DISCUSSION 4.3 | Westerlund panel cointegration test

First, descriptive statistics were applied whereby results are illustrated in
Table 1. We estimate the descriptive statistics without taking the loga-
rithm of the study variables. The mean value of CO2 emissions, financial
development, income, natural resources abundance, education, and
renewable energy use stands at 3.117, 65.744, 6,225.329, 37.6, 70.565,
and 20.312, respectively. Similarly, the standard deviation results reveal
that CO2, FD, GDP, NR, EDU, and RE deviate from mean value by 3.37,
51.68, 10,936.36, 5.066, 29.416, and 64.100, respectively. The results
for the correlation test are given in Table A1 in Appendix.
After the stationary properties, the next step is to analyze the long-
run equilibrium relationship among the study variables. Since cross-
sectional dependence exists in the data, the use of the first-
generation cointegration method may produce biased results. This
study use Westerlund (2008) panel cointegration method to over-
come the issue of cross-sectional dependence and the results of
Westerlund panel cointegration test is presented in Table 4.

TABLE 2 Cross-sectional dependence tests results

4.1 | Cross-sectional dependence Breusch-Pagan LM Pesaran scaled LM Pesaran CD
lnCO 1999.686*** 130.7457*** 41.49576***
In estimating panel data, it was assumed that there is no disruption in
lnFD 1,256.748*** 79.47813*** 13.74655***
data due to cross-SD. However, the presence of CD can lead to inac-
lnY 2,866.614*** 190.5695*** 53.52858***
curate results of the regression. Therefore, we consider the SD in our
lnNR 1,077.311*** 67.09586*** 10.03485***
estimations carrying out different CD techniques. In line with the
lnE 1875.208*** 122.1559*** 41.30770***
environmental literature (Zafar, Shahbaz, et al., 2019; Zaidi, Zafar,
lnRE 1935.144*** 126.2919*** 41.99746***
Shahbaz, & Hou, 2019), we applied three common and reliable CD
tests, namely the BruschePagan LM test proposed by Breusch and Note: *** indicates the significance level at 1%.

TABLE 1 Descriptive statistics

CO2 FD GDPP NR EDU RE
Mean 3.117551 65.7443 6,225.329 3.706922 70.56535 20.31269
Median 1.284801 45.70849 1936.698 1.566583 71.5143 3.577
Maximum 11.80297 221.2885 47,333.56 31.43237 293.841 578.757
Minimum 0.033835 0.359507 264.6244 0.010347 16.54579 0.01
Std. Dev. 3.370734 51.6757 10,936.36 5.066183 29.41671 64.10059
Observations 435 435 435 435 435 435
6 ZAFAR ET AL.

TABLE 3 Second generation unit root tests results TABLE 5 Long-run elasticities tests result

CIPS CADF Cup-FM Cup-BC

Level First-differnce Level First-differnce Coefficient t-statistics Coefficient t-statistics

lnCO −1.346 −4.372*** −1.388 −3.238*** lnFD 0.0230*** 14.8084 −0.0246*** 8.4551
lnFD −2.152 −4.572*** −2.305 −3.852*** lnY 0.8123*** 25.051 0.7896*** 9.6669
lnY −1.805 −3.936*** −1.850 −3.936*** lnNR 0.0242*** 16.9506 0.0230*** 11.0763
lnNR −2.151 −5.407*** −2.168 −3.925*** lnE −0.0490*** 5.6282 −0.0534*** 3.9562
lnE −1.571 −3.453*** −1.776 −3.289*** lnRE −0.0360*** 20.7065 −0.0397*** 9.69347
lnRE −2.492 −4.623*** −2.591 −3.313*** Note: ***, **, * indicate the significance level at 1%, 5%, and 10%
Note: ***, **, * indicate the significance level at 1, 5, and 10%. A test by respectively. The information method that is ICp2 was employed to
Pesaran (2007) has reported the trend and constant. The null hypotheses examine the number of common factors for CUP-BC and CUP-FM
indicate that minimum one country is stationary from all countries. CIPS* methods.
indicates the usage of truncated test. CIPS' critical values were achieved
by Pesaran (2007) which stand certain criteria such as 2.81 at 1%, − 2.66
at 5%, and − 2.58 at 10%. Likewise, CADS' values also stand certain
0.023% in carbon emissions. This infers the gradual effect of financial
criteria such as 2.580 at 1%, − 2.66 at 5%, and − 2.810 significance levels
as reported in lag 1. growth on the environmental standards within selected Asian coun-
tries. The simple availability of financial services for high polluting
companies and investors can be a possible reason for this finding. The
TABLE 4 Fisher effect results
low cost of financial services supports investing heavily in energy con-
Test Statistcs sumption and the purchase of energy-consumption. This trend
dh_g −3.592*** increases the high energy consumption and degrades environmental

dh_p −3.076***
Note: ***, **, * indicate the significance level at 1, 5, 10%. The used
standard is IC2 (K) with utmost No. of factors (K) that is equal to 05. M
was used to indicate the largest integer <4(T/100)2/9 for the selection of
bandwidth as recommended by Newey and West (1994).
Null hypothesis of this study indicates there is no cointegration
among the variables whereas the alternative hypothesis revealed the
cointegration among the variables. The results affirm the existence of
panel cointegration by rejecting the null hypothesis among CO2 emis-
sions, financial development, income, natural resources abundance,
education, and renewable energy use.
4.4 | Long-run estimation
This study investigates the long-term elasticities using Cup-FM and
Cup-BC techniques. Both the methods proposed by Bai and
Ng (2006) and Bai, Kao, and Ng (2009). These methods estimate the
slope parameters which include unobserved common trends to follow
an iterative process. These methods allow for endogeneity and cross-
sectional dependence. In addition, for mixed I(1)/I(0) variables and
regressors, these estimation techniques are robust. The estimate of
the Cup-FM assumes that a factor model follows the error term. Addi-
tionally, the parameters and loadings are recurrently computed until
their conjunction. Table 5 presents the result of long-run elasticity
outputs for the Asian countries.
The results showed a positive and significant relationship
between financial development and emissions. The findings addition-
ally confirmed that 1.00% increase in financial growth causes a rise
quality by producing polluted emissions. In the past, the positive rela-
tionship between such variables was documented by Wang, Vo,
et al. (2020).
The linkage between income and emissions is positive and signifi-
cant. It is observed that 1% increase in economic growth causes
0.8123% rise in carbon emissions. The main reason behind the posi-
tive connection between income and emissions is the use of a large
amount of energy which produces higher carbon emissions, including
transport, agriculture, industrial sector, and etc. Importantly, these
countries highly dependent on nonrenewable energy. Wang, Vo,
et al. (2020) reported a positive link between income and emissions
for China. Natural resource abundance also harms environmental
quality by increasing the level of emissions. It is observed that 1%
increase in natural resources leads a rise in emissions by 0.0242%.
Besides, the role of natural resources in rising CO2 emissions from
selected Asian countries is correlated with economic growth in devel-
oped economies, accelerating the exploitation of natural resources
and unsustainable use, as well as help to attain the country's reliance
on imports of fossil fuel. Likewise, conventional energy sources are
limited and unsustainable that ultimately causes environmental condi-
tions. Our results are similar and consistent with the previous related
studies of (Bekun et al., 2019; Wang, Vo, et al., 2020).
However, education positively influences on environmental qual-
ity by decreasing the level of emissions. It is found that 1% rise in edu-
cation cuts the emissions by 0.049%. It refers the coefficient of
education is slightly bigger than renewable energy use. It implies that
education is more important to reduce the level of polluted emissions
by recruiting educated employees in organizations. Education is also
essential for people and employees because education provides
knowledge about environmental externalities. The educated people
may use the resources and energy in a more productive way rather
ZAFAR ET AL. 7

than illiterate personnel. Similar results have been reported by Zafar 5 | C O N C L U S I O N A N D LI NE S F O R

et al. (2020) for OECD and Mahalik et al. (2021) for selected BRICS
countries. Likewise, environmental quality also improves by increasing
the share of renewable energy use in the total energy share. It is
found that a total of 1% increase in renewable energy use reduces
emissions by −0.036%. The coefficient of renewable energy use is not
too high as we expected. This is because the portion of renewable
energy in the total energy mix is not bigger than nonrenewable
energy. However, most nations in the Asia region are trying to
increase the share of renewable energy. Some other studies Sinha and
Shahbaz (2018) for India and Zafar, Mirza, et al. (2019) for emerging
countries also reported similar results.
4.5 | Dumitrescu and Hurlin panel causality test
results
The findings of long-term elasticity affirm one-way relationship. To
determine the political implications, the political leaders must be
informed of the two-way causal relationships between the variables.
The heterogeneous causality method suggested by Dumitrescu and
Hurlina (2012) is used in this research. Table 6 summarizes the results
as follows.
It is revealed by the present study that bidirectional causality
exists between financial development and polluted emissions at
1% and 10% significance level. It implies that both variables affect
each other. However, income affects carbon emissions neverthe-
less no effect of emissions was observed on income. The one cau-
sality was found because of polluted emissions to natural resource
abundance. The DH results recommended that education leads to
an increase in emissions. The positive and causal feedback rela-
tionship was found between the use of renewable energy and pol-
luted emissions. Bidirectional causality of natural resources,
income, education, and RE exists in financial development. A simi-
lar linkage was observed among income and natural resources,
education, and income, as well as between income and renewable
energy use. A unidirectional link is found from natural resources
toward education. In contrast, natural resources and renewable
energy positively influence each other. The results indicate that
education causes to bring change in renewable energy use and
vice versa.
FU T U R E W O R K
This study explored the relationships among environmental quality of
renewable energy use, education, and abundance of natural resources
by incorporating the significant role of economic growth and financial
development over the period 1990–2018. To achieve the study objec-
tives, this study uses second-generation unit root and cointegration
approaches that control the heterogeneity among the study variables.
Cup-FM and Cup-BC methods were used to investigate the impact of
explanatory variables on carbon emissions. The causal relationship
was tested through the DH method. The cointegration test results
signpost the occurrence of a long-run equilibrium association among
the variables. Outcomes of long-run elasticities suggested that finan-
cial development and GDP leads to environmental degradation. Natu-
ral resource abundance also increases the level of carbon emissions.
However, education and renewable energy consumption improve
environmental quality in Asian countries.
The findings confirm the positive linkages between financial
development and carbon emissions. It is concluded that rising finan-
cial growth may facilitate the expansion of the agricultural and
industrial sectors. This expansion increased the consumption of non-
renewable energy in Asian countries that increases carbon emis-
sions. Nevertheless, we cannot ignore the indirect favorable position
of the countries that endow with a positive role in financial growth.
Financial transparency, financial literacy, and liberalization in the
Asian region could draw more foreign direct investment. Modern
technology and an increased share of renewable energy sources will
achieve the ultimate goal of achieving higher economic growth. Sus-
tainable development goals are simply attainable because economies
can effectively flourish without damaging the environment and by
bringing the capability of sustainability. Findings showed the posi-
tive relations between natural resources and pollution. We urge
policymakers in selected Asian countries to take action to ensure
that fossil fuels are used sustainably to reduce reliance on natural
resources. Moreover, the research and development budget could
also be spent to explore the potential of the country's renewable
energies. Close monitoring of industry is required to regulate the
use of scarce resources particularly mining must be directed to
ensure the utilization in works of modern as well as energy-efficient
technology.

TABLE 6 Dumitrescu and Hurlin results

ΔlnCO2 ΔlnFD ΔlnY ΔlnNR ΔlnE ΔlnRE

ΔlnCO2 1.959* (0.051) 4.680*** (0.000) 1.074 (0.282) 2.834*** (0.004) 3.993*** (0.000)
ΔlnFD 4.820*** (0.000) 2.941*** (0.0033) 6.313*** (0.000) 3.861*** (0.000) 0.474 (0.635)
ΔlnY 1.375 (0.168) 3.237*** (0.001) 5.335*** (0.000) 3.564*** (0.000) 2.889*** (0.003)
ΔlnNR 2.424** (0.015) 3.382*** (0.000) 3.324*** (0.000) 0.457 (0.647) 6.112*** (0.000)
ΔlnE 1.464 (0.143) 3.084*** (0.002) 4.753*** (0.000) 12.620*** (0.000) 12.315*** (0.000)
ΔlnRE 7.533*** (0.000) 4.417*** (0.000) 8.168*** (0.000) 5.362*** (0.000) 3.333*** (0.000)

Note: ***, **, * shows significance points at 1%, 5%, and 10% respectively. In order to choose appropriate lag length, Schwarz information criteria was used.
8 ZAFAR ET AL.
The long-run results of this study concluded the negative influ-
ence of renewable energy on carbon emissions. It ensures that renew-
able energy support to improve the air quality in such Asian countries
by reducing the intensity of emission. The policymakers of such
nations increase R&D expenditures for the development of renewable
energy production technology. Such nations must develop policies
that attract FDI in the renewable energy sector to minimize the cost
of production. Moreover, these nations should import advanced tech-
nology for the production of renewable energy. Education performs a
decisive role in improving the quality of the environment. It plays a
key role in raising the number of carbon emissions. Nonetheless, with
the continuous augment in education rates, Asian countries may able
to progress the environmental quality in the future. The policymakers
need to focus on education budget and curriculum to bring positive
change in society. These countries should further ensure the policy of
equal opportunity to get an education.
This study recommends lines for future research both to academi-
cians and professionals to embrace technological innovation in this
nexus to investigate additional insights and movements concerning
natural resources, renewable energy consumption, and environmental
quality across the globe.
ORCID
Muhammad Wasif Zafar https://orcid.org/0000-0001-5790-3196
Syed Anees Haider Zaidi https://orcid.org/0000-0002-1308-3859
Abdul Waheed https://orcid.org/0000-0002-6667-4660
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APPENDIX A.

TABLE A1 Correlation test results

LNCO LNFD LNY LNNR LNE LNRE
LNCO 1
LNFD 0.7384 1
LNY 0.8957 0.7230 1
LNNR −0.6477 −0.4708 −0.6600 1
LNE 0.6245 0.6469 0.6920 −0.1820 1
LNRE 0.7227 0.7006 0.6946 −0.3557 0.6828 1