The relationship between CO2 emission, energy consumption and economic growth in Malaysia: a three-way linkage approach

Abstract

This study examines the three-way linkage relationships between CO emission, energy consumption and economic growth in Malaysia, covering the 1975-2015 period. An autoregressive distributed lag approach was employed to achieve the objective of the study and gauged by dynamic ordinary least squares. Additionally, vector error correction model, variance decompositions and impulse response functions were employed to further examine the relationship between the interest variables. The findings show that economic growth is neither influenced by energy consumption nor by CO emission. Energy consumption is revealed to be an increasing function of CO emission. Whereas, CO emission positively and significantly depends on energy consumption and economic growth. This implies that CO emission increases with an increase in both energy consumption and economic growth. Conclusively, the main drivers of CO emission in Malaysia are proven to be energy consumption and economic growth. Therefore, renewable energy sources ought to be considered by policy makers to curb emission from the current non-renewable sources. Wind and biomass can be explored as they are viable sources. Energy efficiency and savings should equally be emphasised and encouraged by policy makers. Lastly, growth-related policies that target emission reduction are also recommended.

A Relational Analysis Model of the Causal Factors Influencing CO2 in Thailand’s Industrial Sector under a Sustainability Policy Adapting the VARIMAX-ECM Model

“…Thus, the government should emphasize the issue and prioritize on those causal factors with a direct influence on CO 2 emission to be used in the forecasting model. This is to create the best forecasting model capable for both short-and long-term predictions, though the factors share the same characteristics under the sustainable development policies of many other countries and Thailand, as claimed by Dai, Niu, and Han [28], and Chindo and Abdul-Rahim [20]. This study opens another arena to explore, which can be further developed for future study.…”

“…For this analysis, the researcher employed the ARDL approach, and its result showed that those three studied factors had a great positive influence on CO 2 emissions in both the short and long term. With the same method of analysis, the ARDL method, Sulaiman and Abdul-Rahim [20] conducted an investigation of a three-way linkage relationship between economic growth, CO 2 emissions, and energy consumption in Malaysia during the period of 1975-2015. The examination's result revealed that the rise of both factors; energy consumption and economic growth, do contribute to the rise of CO 2 emissions.…”

Impact of Economic Openness and Innovations on the Environment: a New Look into ASEAN Countries

“…Similarly, an ARDL study investigated the connection among economic growth, energy consumption and CO 2 emissions in Malaysia for 1975-2014. The findings from ARDL estimations show that CO 2 emissions do not affect economic growth and energy consumption, but economic growth and energy consumption have a positive impact on CO 2 emissions in the case of Malaysia [37]. Moreover, another study analyzed the effects of economic growth on the environment along with other variables of the study in 34 countries of Sub-Saharan Africa for 1995-2015.…”

Change-point detection in CO2emission-energy consumption nexus using a recursive Bayesian estimation approach

“…This study is important because energy consumption has been known to be an increasing function of CO 2 emission. In fact, CO 2 emission significantly depends on energy consumption and economic growth (Sulaiman and Abdul-Rahim, 2017). This implies that CO 2 emission increases with an increase in both energy consumption and economic growth.…”