Examining the effectiveness of low-carbon strategies in South Asian countries: the case of energy efficiency and renewable energy

This paper examines the impact of energy efficiency (EE) and renewable energy (RE) on carbon emissions, using a panel data of South Asian countries over the period 1990–2014. The empirical investigation involves the estimation of a panel autoregressive distributed lag model in a multivariate framework by employing the pooled mean group estimator. The estimates are presented for homogenous long-run effects and heterogeneous (country-specific) short-run effects of EE and RE on carbon emissions. The estimated results suggest that a cointegrating link is evident between carbon emissions, EE and RE in South Asian countries, especially after controlling the effects of economic growth and trade openness. The homogenous coefficient estimates reveal that in the long run, carbon emissions decline with a rise in RE, but emissions increase with an improvement in EE. Moreover, heterogeneous coefficient estimates indicate that in the short run, both low-carbon strategies (EE and RE) are effective for India and Nepal. However, only one strategy is effective for Pakistan, Bangladesh and Sri Lanka, that is, RE, RE and EE, respectively. The findings of this study provide new and valuable insights about the impact of EE and RE on carbon emissions in South Asian countries. Based on the results of this study, several crucial suggestions and implications are deliberated to promote long-term environmental sustainability in the region.