Dynamic linkages among hydroelectricity consumption, economic growth, and carbon dioxide emission in Malaysia  (Article)

Lau, E.^ab , 

Tan, C.-C.^ac, 

Tang, C.-C.^d

 

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^a  Department of Economics, Faculty of Economics and Business, Universiti Malaysia Sarawak, Kota Samarahan, Malaysia
^b  Centre for Business, Economics and Finance Forecasting (BEFfore), Universiti Malaysia Sarawak, Kota Samarahan, Sarawak, Malaysia
^c  School of Business and Management, University College of Technology Sarawak, Sibu, Sarawak, Malaysia
^d  Centre for Policy Research and International Studies, Universiti Sains Malaysia, USM, Penang, Malaysia

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Abstract

This study investigates the causal relationship between hydroelectricity consumption (HC), economic growth (GDP), and carbon dioxide (CO₂) emission in Malaysia by applying the time-series techniques. The major findings for this paper are as follows: (1) long-run relationship exists between HC, GDP, and CO₂ emissions. (2) We found a unidirectional causality relationship from HC to CO₂ emissions in the short-run while in the long-run causality runs from GDP and HC toward CO₂ emissions. (3) The results of the variance decompositions suggest that the impact of HC and CO₂ toward GDP becomes noticeable only over the long-run, providing an important policy route map for Malaysia. A step-wise (e.g. combined-use) shift from fossil fuels to Renewable Energy Sources (RESs) seems to be the viable alternative for Malaysia. In this manner, the potential of hydropower for electrification would be the way forward but with caution as the social implication should also be hand in hand with this massive development plan. © 2016 Taylor & Francis Group, LLC.

Author keywords

Causality; CO₂ emission; economic growth; hydroelectricity consumption

Indexed keywords

Engineering controlled terms: Economic and social effects; Economics; Fossil fuels; Global warming; Hydroelectric power; Renewable energy resources

Carbon dioxide emissions; Causal relationships; Causality; Economic growths; Renewable energy source; Social implication; Time series techniques; Variance decomposition

Engineering main heading: Carbon dioxide