Leapfrogging toward Sustainability: The role of renewable energy, energy imports, and debt on Pakistan's carbon emissions.

This study investigates the impact of key economic and energy-related factors on carbon dioxide (CO2) emissions in Pakistan from 1990 to 2021. Specifically, our study fills a research gap by analyzing how energy imports, external public debt, renewable energy consumption and economic growth influence carbon emissions. Employing ARDL and dynamic simulation models, this study assesses long-term and short-term relationship among the variables. Our findings reveal that in short run, energy imports, external public debt and economic growth significantly increase CO2 emissions, whereas renewable energy consumption reduces carbon emissions. In long run, external public debt and economic growth significantly decrease carbon emissions, whereas energy imports and renewable energy show significant positive relation in Pakistan. These findings underscore the central objective of examining how economic and energy dynamics influence environmental sustainability in Pakistan and partially align with the Environmental Kuznets Curve (EKC) hypothesis, indicating that carbon emissions may decline once a certain income threshold is reached. The dynamic simulations further illustrate the evolving impact of such variables on emissions over time. Based on such insights, our study recommends that Pakistan should increase investment in renewable energy, decrease reliance on imported fossil fuels, and channeling debt toward green investments to enable the country to leapfrog towards low carbon and sustainable growth trajectory, offering actionable insights for policy makers.