Abstract

Keywords

Nomenclature

۱٫ Introduction

۲٫ Literature review

۳٫ Econometric model and data

۴٫ Econometric methodology

۵٫ Results and discussion

۶٫ Conclusion

CRediT authorship contribution statement

Declaration of Competing Interest

References

Abstract

This paper primarily aimed to assess the impacts of regional trade integration on the prospects of undergoing renewable energy transition in selected South Asian economies between 1992 and 2015. The overall results from the econometric analyses, controlling for the cross-sectional dependency and slope heterogeneity issues, highlight the importance of promoting intra-regional trade among the South Asian economies to boost the renewable energy consumption shares and renewable electricity output shares in the total final energy consumption and aggregate electricity output figures, respectively. Besides, the non-linearity of the nexuses between intra-regional trade shares and renewable energy consumption shares and between intra-regional trade shares and renewable electricity output shares are also ascertained. The threshold intra-regional trade shares concerning the renewable energy consumption and renewable electricity output shares are predicted at 20.53% and 17.50%, respectively. However, the predicted threholds are significantly higher than the current average intra-regional trade share in South Asia. Moreover, the panel causality analysis reveals unidirectional causal relationships stemming from intra-regional trade shares to renewable energy consumption and renewable electricity output shares. Besides, greater FDI inflows are found to reduce the overall use of renewable energy while higher levels of economic growth and CO2 emissions are found to catalyze renewable energy use in South Asia. Furthermore, the results also implicate a non-linear U-shaped association between positive crude oil price shocks and renewable energy consumption and renewable electricity output shares. Therefore, these findings impose critically important policy implications for liberalizing the intra-regional trade barriers, reducing dirty foreign direct investment inflows, expediting economic growth, reducing fossil fuel dependency and abating carbon dioxide emissions to facilitate renewable energy transition in South Asia.

۱٫ Introduction

South Asia has been recognized as one of the rapidly emerging global regions. The South Asian countries have collectively sustained a rock-solid average annual growth rate of around 7% over the last couple of years (World Bank, 2019a). However, despite persistently growing over the years, these nations have predominantly remained energy-constrained (Murshed, 2020a). Hence, it can be hypothesized that the growth achievements of these economies have been below their potential capacities amidst the traditional energy constraints. The energy crises of the South Asian nations can primarily be credited to a great deal of heterogeneity in the nature of their indigenous energy endowments (Nandy, 2019). Consequently, the majority of these nations have failed to meet their respective energy demand with domestic energy supplies. Consequently, the unreliability of energy supplies across this region is also believed to have underpinned the growth momentum of the South Asian countries (Zhang, 2019). Furthermore, the low electrification rate, especially across rural neighborhoods, is also a common feature of these countries, which further reflects the energy crisis scenario in South Asia.