Links between renewable and non-renewable energy consumption, economic growth, and climate change, evidence from five emerging Asian countries.

Abstract

One of the greatest challenges facing humanity in the current millennium is the need to mitigate climate change, and one of the most viable options to overcome this challenge is to invest in renewable energy. The study dynamically examines the links between renewable energy consumption, non-renewable energy consumption, climate change, and economic growth in five emerging Asian countries during the period 1975-2020. Variables selected in the model have long-term cointegration, as explored by the Pedroni cointegration test and the Westerlund cointegration test. The long-term estimated parameters of the augmented mean group (AMG) method show that renewable energy consumption significantly reduces climate change, while non-renewable energy consumption significantly promotes climate change. The results also show that GDP, investment in transport infrastructure, and urbanization can significantly contribute to climate change in selected emerging Asian countries. Moreover, the results validate the inverted U-shaped EKC hypothesis for emerging Asian economies. Country-specific analysis results using AMG estimates shows that renewable energy consumption reduces climate change in selected emerging Asian countries. Non-renewable energy consumption and investment in transport infrastructure have had significant progressive impacts on climate change in all countries. Urbanization contributes significantly to climate change, with the exception of Japan, which does not have any significant impact on climate change. GDP contributes significantly to climate change in all countries; however, GDP2 has significant adverse effects on climate change in India, China, Japan, and Korea, validating the inverted U-shaped EKC assumption for all countries except Bangladesh. Moreover, the Dumitrescu and Hurlin causality test confirmed a pairwise causal relationship between non-renewable energy consumption and GDP, supporting the feedback hypothesis. The results suggest that the best option for climate change mitigation in selected emerging Asian countries is to transition from non-renewable to renewable energy sources.