Determinants of Renewable Energy Consumption in ASEAN : the Role of Economic and Environmental Drivers

Lai, Khor Yin (2025) Determinants of Renewable Energy Consumption in ASEAN : the Role of Economic and Environmental Drivers. Final Year Project (Bachelor), Tunku Abdul Rahman University of Management and Technology.

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Abstract

This study investigates the determinants of renewable energy consumption (REC) in the ASEAN-10 region from 2015 to 2023. Using panel data estimation methods, including pooled OLS, fixed effects, and random effects models, the analysis identifies the influence of economic growth, carbon dioxide emissions, foreign direct investment (FDI), and energy use on REC. Diagnostic tests indicate heteroskedasticity and serial correlation, leading to the adoption of a Feasible Generalised Least Squares (FGLS) model. The results show that REC is negatively associated with economic growth and total energy use, reflecting the region’s continued reliance on fossil fuels to meet rising demand. Conversely, REC is positively influenced by CO₂ emissions and FDI, implying that environmental pressures encourage renewable adoption while foreign investment provides capital and technology for clean energy projects. The findings highlight that despite growing environmental and investment drivers, structural dependence on fossil fuels remains a critical challenge. Policymakers should therefore prioritize strategies that decouple economic growth from fossil fuel consumption and strengthen investment in renewable energy infrastructure