The role of renewable energy in the energy–growth–emission nexus in the ASEAN region

Abstract

Background: The Association of Southeast Asian Nations (ASEAN) relies mainly on fossil fuels in their energy supply, leading to higher CO2 emissions, pollution, and further environmental degradation. This paper uses the panel vector autoregressive and the Granger non-causality test in the heterogeneous panels, together with long-run estimation techniques, to examine the dynamic link among energy consumption, economic growth, and carbon emissions with the focus on renewable energy for the ASEAN countries in the past three decades. Results: The findings from this paper indicate that carbon emissions are associated with energy consumption. In contrast, renewable energy usage reduces CO2 emissions, improving environmental quality. Economic growth is associated with increased energy consumption and carbon emissions in the ASEAN countries. The findings also indicate that the effects of energy consumption on economic growth are more significant than those of renewable energy in ASEAN. When considered together, these findings form a vicious circle regarding the energy–growth–emission nexus for the ASEAN economies. In addition, a bidirectional Granger causality among energy consumption, economic growth, CO2 emissions and renewable energy usage is confirmed. Conclusions: Renewable energy has emerged as an important viable option for the ASEAN nations to achieve their dual objectives of enhanced economic growth, reduced CO2 emission, leading to improved environmental quality.