LAUSR

Abstract This study focuses on Brazil, Russia, India, China and South Africa (BRICS countries), which contribute over 40% of global CO2 emissions. Using panel co-integration tests, fully modified OLS and seemingly unrelated regressions, the study contributes to the literature by revealing that public debt securities foster the transition from fossil fuel electricity towards low-carbon electricity, whereas private credit is mostly profitless for electricity production transition. The explanation is that environmental pressure urges public capital to play a vital role in electricity transition, while bank loans are reluctant to leave the electricity from fossil fuel for considerable returns. The installed capacity of electricity stations drives the association between financial capital and electricity production. Financial markets in China and South Africa play a more significant role in electricity transition than the other countries. Low-carbon electricity transition requires transformation of financial markets in all these countries.