Comprehensive Outlook on Macroeconomic Determinants for Renewable Energy in Malaysia

Nora Yusma Mohamed Yusoff (), Abdul Rahim Ridzuan (), Thomas Soseco, Wahjoedi, Bagus Shandy Narmaditya and Lim Chee Ann
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Nora Yusma Mohamed Yusoff: Institute of Energy Policy and Research, Universiti Tenaga Nasional, Kajang 43000, Malaysia
Abdul Rahim Ridzuan: Faculty of Economics and Business, Universitas Negeri Malang, Malang 551312, Indonesia
Thomas Soseco: Faculty of Economics and Business, Universitas Negeri Malang, Malang 551312, Indonesia
Wahjoedi: Faculty of Economics and Business, Universitas Negeri Malang, Malang 551312, Indonesia
Bagus Shandy Narmaditya: Faculty of Economics and Business, Universitas Negeri Malang, Malang 551312, Indonesia
Lim Chee Ann: Security Department, Universiti Sains Malaysia, Penang 11800, Malaysia

Sustainability, 2023, vol. 15, issue 5, 1-15

Abstract: Mitigating global warming has been a challenge, and policymakers are responding to this issue by strengthening the commitment to enhance the renewable energy target from 20 to 31 percent in 2025 for Malaysia. However, adopting renewable energy in stages based solely on microeconomic factors, such as the price of energy, is insufficient. Thus, it is essential to investigate the macroeconomic variables that influence the share of renewable energy in Malaysia. In detail, this study introduces selected macroeconomic indicators, including gross domestic investment, domestic investment, foreign direct investment, trade openness, urbanization, financial development, and carbon emissions level, and their impact on renewable energy in Malaysia. The study utilized ARDL (Auto-Regressive-Distributed Lag) estimation based on annual time series data spanning 50 years of observations, beginning in 1971 and ending in 2020. Long-run elasticities show that greater economic development and urbanization increase the proportion of renewable energy. In contrast, increased foreign investment, trade liberalization, and carbon emissions could reduce the use of these clean energies. This paper concludes with a policy recommendation that could assist the country in achieving its goal of implementing a low-carbon, renewable energy-focused state policy.

Keywords: renewable energy; macroeconomic; lower carbon; ARDL; Malaysia (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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