Analyzing the environmental impact of fuel switching: Evidence from ARDL analysis for policy considerations

Abstract

The rise in global temperatures, driven by increased CO2 levels, is a pressing concern. Developing nations like Malaysia face challenges in transitioning to cleaner energy due to resource constraints, making natural gas a crucial transitional solution. This study introduces the Fuel Switch Variable to analyze the impact of shifting fuel consumption patterns on CO2. Using data from 1980 to 2020 and the ARDL model, findings show that policies promoting natural gas over oil and coal reduce CO2 emissions, while economic and population growth increase emissions. Policymakers should incentivize fuel switching, enforce energy efficiency standards, and invest in new technologies.

Keywords

• Fuel switching policy
• Oil, coal, and gas consumption
• Economic growth
• CO2 emissions
• Alternative energy sources