Impact of energy and industrial structure on environmental quality and urbanization: evidence from a panel of BRICS countries

Global sustainable development demands boosting renewable energy and optimizing industrial structures. This study employs a panel vector autoregressive (PVAR) model to examine the dynamic relationship between energy structure, industrial structure, environmental quality, and urbanization in the BRICS countries from 1990 to 2021. Energy structure, industrial structure, environmental quality, and urbanization cointegrate empirically. Energy mix optimization and industrial structure upgrades can improve environmental quality. Energy enhancements also supported urbanization. Accelerating industrial change could adversely impact urbanization. The impulse response results demonstrate that expanding renewable energy and tertiary industries such as financial and service boost environmental quality and urbanization. The variance decomposition investigation reveals significant “path dependence” in reducing carbon emissions and increasing urbanization. Finally, based on the findings, policy insights for enhancing environmental quality and fostering urbanization are laid out and disputed, with long-term implications for environmental managers and urban planners.