Does the Environmental Kuznets Curve Hold for Coal Consumption? Evidence from South and East Asian Countries

Abstract

Coal consumption plays a key role in achieving sustainable growth, although it also leads to significant environmental degradation. This study examines the environmental Kuznets curve (EKC) for coal consumption in South and East Asian countries from 1990 to 2020. We applied the augmented mean group (AMG) and common correlated mean group (CCEMG) estimators, which have several advantages over conventional panel techniques because it considers the endogeneity, slope heterogeneity, and cross-sectional dependency (CD). The study findings provide a comprehensive insight into the complex relationship between coal consumption and environmental degradation. The results show that EKC holds for coal consumption and reducing coal consumption is not enough to achieve environmental sustainability. The results also show that foreign investment and population positively impact coal consumption, while renewable energy negatively impacts coal consumption. This highlights that reducing coal consumption alone is not enough to reduce environmental degradation but there also needs to be a diversion of foreign investment inflow to the sustainable, environmentally friendly project. Furthermore, the share of renewable energy in total output is lower in South and East Asian countries, and it needs to be increased further. Furthermore, to promote renewable energy, foreign investment and population control may be necessary to achieve a sustainable environment while maintaining economic growth.