Revisiting Renewable Energy and Foreign Direct Investment: Paradoxical Impacts on Ecological Footprint

Romanus Osabohien (), Armand Fréjuis Akpa (), Symphorien Zogbasse (), Amar Hisham Jaaffar (), Mamdouh Abdulaziz Saleh Al-Faryan (), Olalekan Paul Albert () and Felix Orole ()
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Romanus Osabohien: Institute of Energy Policy and Research, Universiti Tenaga Nasional, Kajang, Malaysia; & Department of Economics, Monarch University, Iyesi-Ota, Nigeria; & DEPECOS Institutions and Development Research Centre, Ota, Nigeria,
Armand Fréjuis Akpa: Institut Supérieur Agronomique et Vétérinaire de Faranah, Faranah, Guinea,
Symphorien Zogbasse: Department of Economics, University of Abomey-Calavi, Cotonou, Benin; & Development Finance and Public Policies, University of Namur, Namur, Belgium,
Amar Hisham Jaaffar: Institute of Energy Policy and Research, Universiti Tenaga Nasional, Kajang, Malaysia,
Mamdouh Abdulaziz Saleh Al-Faryan: Board Member and Head of the Scientific Committee, The Saudi Economic Association, Riyadh, Saudi Arabia,
Olalekan Paul Albert: University of New South Wales, Australia,
Felix Orole: Australian Catholic University, Australia.

International Journal of Energy Economics and Policy, 2026, vol. 16, issue 2, 775-787

Abstract: This research analyses the influence of foreign direct investment (FDI) and renewable energy usage on China's ecological footprint from 1990 to 2022, employing the Autoregressive Distributed Lag (ARDL) model. The findings indicate that, in the short-term, a 1% increase in renewable energy consumption raises the ecological footprint by 0.022 global hectares (gha) per capita. However, in the long-term, this increase is more pronounced, augmenting the footprint by 0.033 gha per capita. Moreover, foreign direct investment (FDI) exhibits a significant negative relationship with the ecological footprint in the short-term, indicating that such expenditures facilitate environmental enhancements. Nonetheless, over the long term, foreign direct investment does not exert a statistically significant influence on China's ecological footprint. These findings contest traditional assumptions about the environmental advantages of renewable energy and underscore the necessity for improved regulations that optimise renewable energy practices. The study's findings indicate the necessity of encouraging green foreign direct investment to maintain its immediate environmental advantages. Recommendations include diversifying energy sources, strengthening environmental regulations, and integrating technological innovation in FDI-driven sectors to foster long-term sustainability. The paper concludes with recommendations for further research, including sectoral analysis, comparative studies, and the examination of environmental policies in reducing the ecological footprint.

Keywords: Foreign Direct Investment; Renewable Energy Consumption; Ecological Footprint (search for similar items in EconPapers)
Date: 2026
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DOI: 10.32479/ijeep.22274

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