Non linear effect of Biomass, fossil fuels and renewable energy usage on the economic Growth: Managing sustainable development through energy sector

Abstract

• Effect of biomass, fossil fuels, and renewable energy resource usage on GDP for East-Asia-Pacific. • Nonlinear Auto regressive Distributive Lag (NARDL) technique for investigating the effects. • NARDL shows FFC, GBM, RNEC have the non linear association with the economic growth of East Asia Pacific. • Fossi fuels and geo biomass energy consumption both effect positively to the economic growth. Climatic variations pose a big challenge to the world’s environmental sustainability and economic growth stability. The ability of the environment in the East-Asia and Pacific region to sustain economic growth is jeopardized by wasteful resource use and depletion, widespread ecosystem degradation and pollution, and man-made climate change. The country, on the other hand, is working hard to boost regional prosperity, resilience, and resource efficiency by providing cleaner energy sources. This study aims to explore the effect of biomass, fossil fuels, and renewable energy resource usage on the economic growth of the East-Asia-Pacific region. The time-series data from 1985 to 2020 is covered in the study for the empirical analysis. The advanced econometric technique of the Nonlinear Autoregressive Distributive Lag (NARDL) model is used. The results show that all the indicators have a significant asymmetric impact on the economic growth of the East-Asia-Pacific region in the short run. As such, a positive shock to fossil fuel consumption (Geo biomass consumption) will lead to higher (higher) growth and a negative shock to fossil fuel energy consumption (Geo biomass consumption) will lead to higher (lower) growth. The variables show positive associations through graphical representations of the Wavelet coherence technique. Further CUSUM and CUSUM Sq tests verify the model stability. The study especially helps policymakers to focus on Geo Biomass Energy production as it proves to be most beneficial to the atmosphere and has a significant impact on the economic growth of an economy.