Nexus between renewable energy, natural resources and carbon emissions under the shadow of transboundary trade relationship from South East Asian economies

Abstract

This study determined the influence of renewable energy and natural resources on carbon emissions by paying special attention to the transboundary trade relationship between South East Asian (SEA) economies. To highlight the importance of international trade relationships among the SEA economies, an interaction term is introduced. Moreover, to estimate the results, panel data from 1996 to 2019 is analyzed by applying Cross-Sectional Augmented Autoregressive Distributed Lag (CS-ARDL). The results show that renewable energy consumption is a significant factor that can reduce carbon emissions. The employment of interaction term shows that international trade improves the influence of renewable energy to control carbon emissions. The findings also depict that natural resources consumption is stimulating carbon emissions. While a strong trade bond is helping to reduce the influence of natural resources consumption on carbon emissions. The findings of this study highlight the importance of international trade at the regional level to mitigate carbon emissions. The study suggests that improvement in international trade may prove a helpful strategy to promote renewable energy sources and diminish the reliance on natural resources such as fossil fuels, this will ultimately help to mitigate carbon emissions.