Citation: Mukhtarov, S.; Aliyev, F.; Aliyev, J.; Ajayi, R. Renewable Energy Consumption and Carbon Emissions: Evidence from an Oil-Rich Economy. Sustainability 2023, 15, 134. https:// doi.org/10.3390/su15010134 Academic Editors: Marc A. Rosen and Jacob Arie Jordaan Received: 8 November 2022 Revised: 14 December 2022 Accepted: 19 December 2022 Published: 22 December 2022 Copyright: © 2022 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https:// creativecommons.org/licenses/by/ 4.0/). sustainability Article Renewable Energy Consumption and Carbon Emissions: Evidence from an Oil-Rich Economy Shahriyar Mukhtarov 1,2, * , Fuzuli Aliyev 3 , Javid Aliyev 4 and Richard Ajayi 5 1 Faculty of Economics and International Relations, Vistula University, Stoklosy 3, 02-787 Warsaw, Poland 2 UNEC Empirical Research Center, Azerbaijan State University of Economics (UNEC), Istiqlaliyyat Str. 6, AZ1141 Baku, Azerbaijan 3 School of Business, ADA University, Ahmadbey Aghaoghlu 61, AZ1008 Baku, Azerbaijan 4 Department of College of Islamic Studies, Islamic Finance and Economics, Hamad Bin Khalifa University, Education City, Doha P.O. Box 34110, Qatar 5 Department of Finance, College of Business Administration, University of Central Florida, Orlando, FL 32816, USA * Correspondence: smuxtarov@beu.edu.az or s.mukhtarov@vistula.edu.pl Abstract: This article examines the influence of renewable energy consumption, real GDP per capita, exports and imports on consumption-based CO 2 emissions in Azerbaijan from 1993 to 2019 by employ- ing the Dynamic Ordinary Least Squares Method (DOLS). The results reveal that renewable energy consumption has a negative impact on CO 2 emissions, while real GDP per capita has a positive effect. According to the findings, a 1% increase in renewable energy consumption leads to a 0.26% decrease in consumption-based CO 2 emissions, while a 1% rise in real GDP per capita leads to a 0.46% rise in consumption-based CO 2 emissions. In addition, imports and exports show positive and negative effects respectively. Numerically, a 1% rise in imports results in a 0.18% rise in CO 2 emissions, whereas a 1% increase in exports reduces CO 2 emissions by 0.16%. This is consistent with expectations and theoretical outcomes described in the functional specification and data section. The negative influence of renewable energy consumption, as well as the larger effect of imports, emphasize the necessity of implementing ecologically friendly measures in both energy sectors (particularly, the need to increase the share of renewable energy in total energy use) and international trade. Keywords: renewable energy; CO 2 emissions; DOLS; Azerbaijan 1. Introduction A significant increase in carbon emissions is one of the main and most challenging issues of the modern global economy [1]. Based on the report of the World Bank, the aggregate level of CO 2 all over the world grew almost 70% from 1990 to 2018 [2]. This is an alarming fact that reflects the rapidly increasing greenhouse emissions. Taking this situation into account, the Intergovernmental Panel on Climate Change (IPCC) reports that global warming could approach 1.5 ◦ C from 2030 to 2052 if the current trend continues [3,4]. Regarding potential environmental effects, greenhouse gas emissions can form several types of pollutions. The most notable one among them is air pollution, which leads to climate change [5]. At present, rising levels of CO 2 in the air lead to global warming and as a result, hazardous effects, such as desertification (especially in Africa), floods (mainly in Indonesia), deforestation, erosion and others emerging in different parts of the world [6]. These natural problems can affect all sectors of the global economy, including health, food security, and many others. Realizing the importance of dealing with CO 2 emission and its consequences, several steps were taken by countries through the Kyoto protocol and the Paris agreement with the aim of decreasing greenhouse gas emissions. In addition, to avoid harmful consequences of conventional energy and CO 2 , the United Nations set a Sustainability 2023, 15, 134. https://doi.org/10.3390/su15010134 https://www.mdpi.com/journal/sustainability