The Impact of Chinese Direct Investment on Energy Transition and Carbon Decoupling in ASEAN

Nisit Panthamit, Somkiat Kamolpun, Chukiat Chaiboonsri and Mingzhu Zhao

Chapter 2 in Green Finance and Energy Transition in ASEAN, 2026, pp 29-65 from World Scientific Publishing Co. Pte. Ltd.

Abstract: This study explores the effect of Chinese outward foreign direct investment (COFDI) on carbon emissions decoupling in ASEAN countries, focusing on balancing economic growth and environmental sustainability. It employs econometric models such as the fixed effect, random Generalized Least Squares effects, and mixed effect models to estimate panel data, along with the Tapio Decoupling and Logarithmic Mean Divisia Index (LMDI) models to measure the impact of COFDI on carbon emissions decoupling. Using data from 2003 to 2020, the study mitigates spurious regression through a panel unit root test. Findings indicate that COFDI can either promote or hinder decoupling, depending on technological advancements and scale effects. Policy recommendations are tailored to income-level groups within ASEAN, stressing the need for green investments and technology transfer to achieve sustainable development goals. These strategies could help ASEAN nations decouple economic growth from carbon emissions, advancing global sustainability.

Keywords: Green Finance; Energy Transition; ASEAN; Carbon Neutrality; Renewable Energy; Sustainable Finance; Climate Finance; Energy Policy; Green Bonds; Net-Zero; Transition Finance; Clean Energy Investment; Sustainable Development; Decarbonization; Climate Change Mitigation; ESG (Environmental; Social; and Governance); Low-Carbon Economy; Energy Markets; Financial Mechanisms for Sustainability; Energy Efficiency; Foreign Direct Investment (FDI) in Energy; Carbon Pricing; Policy and Regulation; Just Transition; Green Sukuk; Sustainable Infrastructure; Public-Private Partnerships (PPP); Institutional Investors in Clean Energy; Green Investment Strategies; Financing Renewable Energy; Southeast Asia Energy Policy; China Energy Investment; ASEAN Climate Goals; Energy Security in ASEAN; COP28 and Energy Transition; COP29; Economic Growth and Green Energy; Sustainable Power Systems; Carbon Markets in Asia; Green Hydrogen in ASEAN; Electrification and Smart Grids (search for similar items in EconPapers)
JEL-codes: G23 O13 Q01 Q40 Q50 Q56 (search for similar items in EconPapers)
Date: 2026
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