Abstract
This study examines the potential of Renewable Energy Sources (RES) in reducing the impact of carbon emission in Malaysia and the Greenhouse Gas (GHG) emissions, which leads to global warming. Using the Environmental Kuznets Curve (EKC) hypothesis, this study analyses the impact of electricity generated using RES on the environment and trade openness for the period 1980-2009. Using the Autoregressive Distributed Lag (ARDL) approach the results show that the elasticities of electricity production from renewable sources with respect to CO 2 emissions are negative and significant in both the short and long-run. This implies the potential of renewable energy in c ontrolling CO 2 emissions in both short and long-run in Malaysia. Renewable energy can ensure sustainabilit y of electricity supply and at the same time can re duce CO 2 emissions. Trade openness has a significant negati ve effect on CO 2 emissions in the long-run. The Granger causality test based on Vector Error Correc tion Mode (VECM) indicates that there is an evidenc e of positive bi-directional Granger causality relati onship between economic growth and CO 2 emissions in the short and long-run suggesting that carbon emissions and economic growth are interrelated to each other . Furthermore, there is a negative long-run bi-direct ional Granger causality relationship between electr icity production from renewable sources and CO 2 emissions. The short-run Granger causality shows a negative uni-directional causality for electricity productio n from renewable sources to CO 2 emissions. This result suggests that there is an inverted U-shaped relatio nship between CO 2 emissions and economic growth.
Highlights
Carbon dioxide (CO2) emissions are the major causes of Greenhouse Gas (GHG) emissions and global warming
This study examines the potential of Renewable Energy Sources (RES) in reducing the impact of carbon emission in Malaysia and the Greenhouse Gas (GHG) emissions, which leads to global warming
The Granger causality test based on Vector Error Correction Mode (VECM) indicates that there is an evidence of positive bi-directional Granger causality relationship between economic growth and CO2 emissions in the short and long-run suggesting that carbon emissions and economic growth are interrelated to each other
Summary
Carbon dioxide (CO2) emissions are the major causes of Greenhouse Gas (GHG) emissions and global warming. Rapid depletion of fossil fuels and their negative impacts on the environment is slowly shifting the world economies towards using more sustainable renewable energy sources. The five main renewable energy sources are biomass, water (hydropower), geothermal, wind and solar. Except for biomass the other renewable energy sources can be regenerated, sustain and do not directly have negative impact on global warming and climate change. Economic growth along with industrialization process bring a substantial increase in energy demand especially electricity. In order to meet this increased demand of electricity and at the same time to minimize the negative environmental impacts of electricity generation and/or consumption, substantial effort and investment in Corresponding Author: Jamalludin Sulaiman, School of Social Sciences, University Sains Malaysia, Penang, Malaysia
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