Evaluating the role of renewable energy natural resources and globalization in environmental quality in OIC countries

Abstract

Abstract Climate change has intensified environmental challenges globally, with greenhouse gas emissions rising more rapidly in Organization of Islamic Cooperation (OIC) countries than the global average. Over half of the OIC member states face high climate vulnerability due to limited institutional and technological capacity for mitigation and adaptation. This study makes a novel contribution by analyzing the drivers of environmental quality in 36 OIC countries from 1996 to 2020 using the load capacity factor (LCF), a holistic indicator that balances ecological demand and biocapacity supply. Unlike prior studies that focus narrowly on CO₂ emissions, LCF provides a broader measure of sustainability. The analysis is stratified by income levels (high, upper-middle, and lower-middle income) to uncover income-specific dynamics. The CS-ARDL approach was employed to estimate both short- and long-run relationships. The findings reveal that economic expansion improves environmental quality in high-income but degrades it in upper- and lower-middle-income groups. Renewable energy consumption consistently enhances environmental sustainability across all income groups, while natural resource dependence undermines it. Economic globalization improves environmental quality in high-income but has adverse effects in middle-income economies. Notably, the rule of law emerges as a strong and consistent driver of environmental improvement across all groups. These findings underscore the need for income-specific strategies that prioritize renewable energy investment, promote sustainable natural resource management, strengthen institutional quality, and integrate environmental objectives into globalization and trade policies.