The Impact of Hydropower Energy in Malaysia Under the EKC Hypothesis: Evidence From Quantile ARDL Approach

Abstract

The present study investigates the impact of economic growth, hydropower generation, and urbanization on Malaysia’s CO2 emissions. This study applies Quantile Autoregressive Lagged (QARDL) technique for the period of 1965Q1 to 2018Q4. The Granger-causality in quantiles is applied to confirm the causal nexus among the modeled variables. The outcomes demonstrate that hydropower generation decreases the detrimental effects of CO2 emissions at the range of high quantile levels. Furthermore, urbanization, except for higher quantiles, exhibits negative impacts on CO2 emissions. Also, the QARDL coefficients confirm the presence of the Environmental Kuznets Curve hypothesis from median to higher quantiles. Besides, the Granger-causality test confirms the two-way causality among CO2 emissions and hydropower generation in Malaysia’s economy and the same for the other series. The policymakers should enhance the market attractiveness of hydropower generation projects through incentives for the investors.