Emissions of carbon dioxide from electricity production in ASEAN countries: GMM and quantile regression analysis

Abstract

As the economies of ASEAN countries have grown, making energy has become one of their biggest concerns. This research examines CO₂ emissions from electricity production sources in ASEAN countries. The paper examined data from 1971 to 2020 using methodologies such as ordinary least squares (OLS), fixed-effects (FE), random effects (RE), generalized methods of moments (GMM), and quantile regression (QR). Here, the Housman test reveals that FE is better than RE. The Hansen and Sargan tests show that all instruments are valid. According to the FE, RE, and GMM approaches, electricity generated from coal and oil deteriorates the environment. The use of coal and natural gas results in higher CO₂ emissions, according to the OLS and QR methods. All available evidence suggests that coal-fired power generation has a higher impact on emissions than any other source. There is a strong correlation between CO₂ and coal at 0.514. While CO₂ and hydro have the strongest negative correlation, this is − 0.530. All regression methods assure that hydroelectricity generation can reduce CO₂ emissions more than any other energy source. A 1% rise in hydro power reduces CO₂ emissions by 0.576% in FE and by 0.05% in differenced GMM estimation. On the other hand, a 1% rise in coal-generated electricity increases CO₂ emissions by 0.158% in FE and 0.017% in the differenced GMM estimation. The study suggests that CO₂ emissions can be reduced without significantly affecting electricity generation if fossil fuel consumption is reduced. The government should launch public and private initiatives to promote renewable energy sources such as wind, hydropower, and solar to counteract climate change.