The prime focus of this study is to explore the influence of fossil fuel consumption, electrical energy consumption, oil-based imports, and expansion of urbanization on the environmental degradation experienced in developing economies of Latin America and the Caribbean (LAC). This study has applied a system Generalized Method of Moment with a two-step estimator involving a panel of twenty middle and lower-middle income economies for the period 1990 to 2015. The results indicate that fossil fuel consumption, oil imports and urbanization expansion are significantly contributing to environmental degradation. The outcomes have also confirmed the reversed U-shaped relationship between carbon emissions and per capita growth. The findings determine that the use of renewable energy sources can help to meet rising energy demand and also lower the trade deficit by decreasing the import of oil in developing countries of Latin America and the Caribbean. (C) 2017 Elsevier Ltd. All rights reserved.