Renewable electricity generation, co2 emissions and economic growth: Evidence from middle-income countries in Asia

Abstract

Over the past three decades there has been a steady growth in total electricity generation in Asia. Although most of this electricity came from natural gas and coal, renewable electricity generation also has significantly contributed to total electricity generation, with hydro being the largest source of renewables-based electricity. In this study, we analyze the dynamics between economic growth, emissions of carbon dioxide (CO2) and the share of renewable electricity in total electricity generation in eleven Asian developing countries over the period from 1980 to 2010. The Structural Vector Autoregression (SVAR) methodology is used to study the interactions among the variables and to analyze the impact of expansion of renewable electricity on per capita emissions and economic wellbeing. Our results show that the majority of middle-income countries in Asia are likely to face a trade-off between economic growth and environment sustainability at least in the early years. Therefore, such countries may need to implement policies complementing renewable energy generation and improving energy efficiency.