Law, Energy, and the Environment: How Rule of Law Conditions the Carbon Impact of Energy Consumption in Developing Economies

Abstract

This study is inspired by the fact that carbon dioxide emissions have continued to increase in the developing world and the increased realisation that legal frameworks do influence the environment. Though dependency on fossil fuels has been recognised as one of the key contributors to carbon dioxide emissions, little focus has been given to the role played by the rule of law in conditioning the environmental impacts of the consumption of fossil fuels as well as renewable energy. This study aims to investigate the direct consequences of energy use in fossil fuels and renewable energy use on carbon dioxide emissions, and determining whether and how the rule of law moderates these associations. Using panel data from thirty-seven developing economies spanning the years 2015 to 2023, the study applies panel regression techniques to estimate the effects of fossil fuel consumption, renewable energy consumption, and the rule of law on carbon dioxide emissions. The baseline findings show that fossil fuel consumption significantly increases carbon dioxide emissions, while renewable energy consumption has a positive but statistically insignificant effect. However, once interacting with the rule of law, fossil fuel consumption becomes negatively and significantly associated with carbon dioxide emissions, indicating that stronger adherence to the rule of law can mitigate its environmental impact. The study offers a novel legal perspective by demonstrating that the rule of law conditions the carbon consequences of energy consumption. It contributes to the advancement of Sustainable Development Goals 7, 13, and 16 by emphasising law as a critical instrument for sustainable energy transitions and climate governance.