Examining the impact of clean environmental regulations on load capacity factor to achieve sustainability: Evidence from APEC economies

Abstract

Environmental regulations have emerged as a critical policy tool for promoting environmental sustainability worldwide. However, there is a dearth of literature that investigates the impact of environmental regulations on load capacity factor in Asia-Pacific Economic Cooperation (APEC) economies. This study aims to address this gap by examining the role of renewable energy consumption, human capital, and environmental regulations in improving load capacity factor. In doing so, the paper covers 14 APEC economies; applies second generations panel data models (i.e., CUP-FM (continuously updated fully modified) as the base model and CUP-BC (continuously-updated and bias-corrected) for the robustness); and runs data between 1992 and 2018. The empirical findings present that: i) renewable energy consumption and human capital contribute to improving load capacity factor; ii) environmental regulations are not at a level to increase load capacity factor; iii) economic growth and trade openness significantly reduce load capacity factor. Considering empirical outcomes, this study suggests that APEC should tighten environmental regulations to achieve sustainable environment. In addition, this study offers important sustainable environmental policies for APEC within the framework of empirical findings.