FOSSIL FUEL PRICE, CARBON DIOXIDE EMISSION, AND RENEWABLE ENERGY CAPACITY: EVIDENCE FROM ASIAN DEVELOPING COUNTRIES

Karren Lee-Hwei Khaw; Toh Jia Ni

doi:10.32890/ijbf2021.16.1.5

Authors

Karren Lee-Hwei Khaw Department of Finance and Banking, Faculty of Business and Accountancy University of Malaya
Toh Jia Ni Department of Finance and Banking, Faculty of Business and Accountancy University of Malaya

DOI:

https://doi.org/10.32890/ijbf2021.16.1.5

Keywords:

renewable energy, fossil fuels, Asian developing countries, Co2 emissions

Abstract

This paper examined the impact of fossil fuel price and carbon dioxide (CO2) emission on renewable energy, using a sample of 14 Asian developing countries from the years 2000 to 2018. Fossil fuel prices, mainly those of crude oil and coal, are positively related to renewable energy capacity. CO2 emission is also a positive driver, indicating the significance of environmental concern. The results were consistent for both the upper-middle-income and lower-middle-income countries. Between fossil fuels and CO2 emission, the positive impact of CO2 emission outweighed that of fossil fuels. From a policy perspective, this paper concurs the need to shift huge subsidies away from fossil fuels to renewable energy and to enforce a heavy tax on CO2 emission for a sustainable environment.