Determining the dynamic linkages between renewable electricity generation and its determinants toward sustainable energy in Malaysia

Abstract

This study aims to analyse the dynamic relationship between renewable electricity generation and its determinants in Malaysia from 1980 to 2016. F-Bound test and VECM are applied. A dynamic long-run relationship exists among the variables use. Long-run elasticity of labour and non-renewable electricity generation on renewable electricity generation is positive elastic and negative elastic, respectively. The short-run elasticity of capital, GDP and financial development on renewable electricity generation is negative elastic, positive elastic and negative inelastic respectively. Also, long-run bidirectional causality between FD and renewable electricity generation, unidirectional causality running from capital, labour, non-renewable electricity generation, and GDP to renewable electricity generation is discovered. However, short-run unidirectional causality from capital and labour to renewable electricity generation and renewable electricity generation to FD is found. Accordingly, these findings highlight important messages to policymakers in the process of sustainable energy through the determinants influence the renewable electricity generation in Malaysia.