CARBON TAXITION, ENERGY TRANSITION, AND SOCIAL INEQUALITY: EVIDENCE FROM BRICS COUNTRIES

Abstract

This study aims to empirically examine the impact of carbon tax policies on energy transition and social inequality in BRICS countries over the period 2018–2022. Energy transition is measured by the share of renewable energy in the national energy mix and installed renewable energy capacity, while social inequality is captured using the Gini ratio and the Human Development Index. The study employs panel data regression techniques, including Fixed Effect and Random Effect Models selected through the Hausman test, complemented by stationarity, cointegration, and Error Correction Model analyses to distinguish short-run and long-run dynamics. The empirical results indicate that carbon taxation has a positive and statistically significant effect on accelerating the energy transition, as reflected in the increasing share of renewable energy across BRICS economies. However, the effect of carbon taxation on social inequality is found to be statistically insignificant, suggesting that carbon tax policies do not directly alter income distribution in the absence of complementary measures. These findings highlight the necessity of accompanying redistributive mechanisms and social protection policies to ensure that carbon taxation supports an inclusive and sustainable energy transition.