What Drives Renewable Energy Consumption in the ASEAN Countries? A Comprehensive Analysis of the Key Determinants and the Environmental Concerns

Abstract

Abstract This study examines the macroeconomic factors that affect the consumption of renewable energy and environment in six ASEAN countries. The Pooled Mean Group-Auto-Regressive Lag (PMG-ARDL) model analyses 1990–2019 data. The results indicate that renewable energy use exhibits a positive co-integration with GDP across six ASEAN countries, indicating a long-term relationship. According to PMG, economic growth promotes the adoption of renewable energy in all six ASEAN countries. While, foreign direct investment (FDI), carbon emissions, and population exert a detrimental influence on the demand for renewable energy. In countries with insufficient renewable energy supplies, FDI may be discouraged by the negative association between renewable energy use and FDI. The studies also showed that pollution of environmental via carbon emissions does not incentivize industries to allocate resources towards renewable energy investments. The excessive dependence on fossil fuels poses a hindrance to investment in renewable energy within the ASEAN region. Thus, analysing macroeconomic characteristics and the environmental concerns of ASEAN that support the adoption of renewable energy can have important policy implications, particularly in the pursuit of achieving Net Zero Emissions. The comprehensive examination can provide valuable insights to policymakers, especially when assessing renewable energy policy targets. This can ultimately result in more sustainable and environmentally conscious decision-making for the region's energy future. JEL Classification