A Simple Multivariate Time Series Analysis Examining the Effect of Technological Advancement, Gross Fixed Capital Formation and Renewable Energy on Malaysia's Decarbonization

Abstract

The challenge of decarbonizing Malaysia's energy sector to cut carbon emissions need to be deeply understood and examined to seek balance between its energy policy goals and developing its economic activities to ensure income growth. Technological development and making innovations appear to be the essential method to cut CO2 emissions for a country as to pursue the seventeen (17) sustainable development goals (SDGs) set up by the United Nations. This study investigates the causal relationships between gross domestic product (GDP), technological advancement proxy by fixed telephone line (FTL), gross fixed capital formation (GFCF), foreign direct investment (FDI), electricity production (ELC), renewable energy (RWE), transport (TPT), manufacturing (MFC) and non-renewable energy (NREW) proxy by fossil fuel energy consumption in reducing the carbon emissions in Malaysia. The results of multiple regression analysis showed a positive significant effect between GDP, MFC and carbon emission, but a negative significant effect between GFCF and REW with carbon emission. The remaining five variables portray an insignificant impact. Hence, it implies that Malaysia should invest more on GFCF and REW which would help to improve its manufacturing sector and sustain its GDP concurrently help to decarbonize its emissions.