Investigating the impact of RE consumption on CO2 emissions: evidence from the SAARC countries

Abstract

Purpose. To study CO2 emissions through the use of renewable energy (RE) in the countries of the South Asian Association for Regional Co-operation (SAARC) region (Bangladesh, Bhutan, Sri Lanka, India, Pakistan, Afghanistan, Nepal, and the Maldives) using the data between 2002 and 2020. Methodology. For the purpose of the study, panel estimation methods were employed including Pooled Mean Group (PMG), Mean Group (MG), and Dynamic Fixed-Effect (DFE). Findings. Hausman test confirms the efficiency of PMG estimation method compared to MG estimation method and DFE estimation method. The results of PMG indicate long-run relationships among the studied variables. Besides, the outcomes of PMG reveal the negative impact of RE on CO2 emissions in the long-run, while in the short-run, the study did not reveal the impact of RE on CO2 emissions. In the case of specific countries, the results show that RE features increased CO2 emissions in a country like Pakistan in the short-run, while RE decreases CO2 emissions in Bhutan, Nepal and Afghanistan in the short-run. Originality. The study found the impact of RE consumption on CO2 emissions in SAARS countries obtained for the first time in the terms of SAARS region. Practical value. The governments of the SAARC countries can use the results of the study attempting to decrease CO2 emissions.