The moderating role of renewable and non-renewable energy in environment-income nexus for ASEAN countries: Evidence from Method of Moments Quantile Regression

Abstract

A vast body of studies estimates the impact of energy consumption on the environment. A typical empirical study either use aggregate energy consumption or apply conventional econometric techniques in modelling the nexus of energy, income and environment. To correct these gaps, the objective of the study is to use renewable and non-renewable energy consumption in analyzing energy-income-environment nexus, and to apply the novel Method of Moments Quantile Regression for ASEAN countries. The outcomes indicate that non-renewable energy consumption stimulate carbon emissions across all quantiles (10th to 90th), the value of the 10th quantile is 0.257 which rises to 0.501 till 90th quantile. Whereas, the renewable energy consumption leads to a decrease in CO2 emissions across all the quantiles (10th to 90th) but this association is statistically insignificant at higher quantiles from 60th to 90th. The empirical outcomes also verify the presence of the environmental Kuznets curve relationship, which is statistically significant from the middle (30th) to higher (90th) quantiles. Moreover, the finding of panel estimation approaches (FMOLS, DOLS, FE-OLS) also verify the existence of the EKC hypothesis in ASEAN countries. Their finding also describes that 1% increase in non-renewable energy consumption increase CO2 emission by 0.29%, 0.26% and 0.30% whereas 1% increase in the usage of renewable energy reduces CO2 emission by 0.17%, 0.15% and 0.17% in case of FMOLS, DOLS and FE-OLS respectively. The empirical results conclude that the government should encourage and subsidize the sources of green energy to tackle environmental degradation. More policy implications are further discussed in the study.