Renewable Energy Consumption, Trade Openess, and Climate Change in Asia Emerging Market Countries

Abstract

Renewable energy plays an essential role in reducing carbon emissions, which can be detrimental to climate change and pose a threat to our lives. Therefore, this study aims to examine the nexus between renewable energy consumption, trade openness, and climate change. The data used consist of panel data for emerging Asian countries from 2010 to 2021. The Granger Causality Test and Vector Error Autoregressive Model were employed to investigate the relationship among the variables. The findings indicate a unidirectional relationship between renewable energy and inflation, as well as between renewable energy consumption and CO2 emissions. These findings suggest that carbon dioxide emissions can drive renewable energy consumption, signaling that low-carbon development benefits from globalization and that globalization stimulates renewable energy growth, aiding in mitigating climate change. The research results also confirm a bidirectional relationship between trade openness and inflation. The impulse response analysis supports the notion of a robust negative correlation between a country’s trade openness and its inflation rate, both in the short and long term.

Keywords

• renewable energy consumption
• trade openness
• climate change