RENEWABLE ENERGY CONSUMPTION, CO_2 EMISSIONS AND ECONOMIC GROWTH IN MALAYSIA

摘要

This study analyses the relationship between economic growth, renewable energy consumption, CO_2 emission and non-renewable energy consumpption in Malaysia using annual data from 1970 to 2013. In contrast to most of the earlier studies that investigated the validity of the emission-growth nexus and the energy-growth nexus in the same framework, this study contributes to the literature by focussing on the role of renewable energy use in the emissions-energy-growth relationship. We analysed the dynamic linkages among the variables by applying time-series techniques such as unit root and co-integration tests, VECM and Granger causality tests. The VECM approach used in this paper allows all variables to be endogenous, thereby allowing for additional channels of causality. The equations of the VECM were then tested for robustness by way of diagnostic checking.The empirical results suggest that the there is a long-run relationship among the variables. In addition, the empirical evidence indicates that renewable energy consumption has a positive effect on economic growth. In contrast, an increase in the carbon dioxide emission and non-renewable energy consumption tend to decrease the economic growth. Results reveal that there is unidirectional Granger causality from economic growth to renewable energy consumption, but not vice versa.We also find that there is evidence of unidirectional Granger causality from emission and non-renewable energy consumption to renewable energy consumption.In terms of policy recommendations, this study reveals that the consumption of renewable energy is vital to achieve sustainable development. Therefore, there is a strong need for the government of Malaysia to develop specific national and local energy policies to promote renewable energy consumption. Moreoover, there is an alternative and feasible option for Malaysia to enhance the use of alternative sources of energy that are relatively free from pollutant emissions. Appropriate efforts undertaken by governments, such as reducing the consumption of conventional energy and increasing the proportion of renewable energy use, will not only benefit the government but will also ensure that sustainable development can be achieved. Hence energy policy in Malaysia should be designed taking into consideration economic development, environmental development and energy consumption.