Renewable Energy Consumption, Governance Quality, and CO2 Emissions in Asia-Pacific Region: Evidence from the MMQR Approach

Abstract

Transitioning from fossil fuels to renewable sources unquestionably contributes significantly to reducing carbon emissions and is the way forward to achieving sustainable development goals. This study, thus, aims to empirically investigate the effects of renewable energy consumption on environmental sustainability (carbon emissions) in the Asia-Pacific region, with a specific emphasis on governance quality as a moderator. Using the MMQR approach for 25 Asia-Pacific countries over the period 1998-2022, the analysis reveals that renewable energy consumption is significantly and negatively correlated with CO2 emissions across all quantiles, with the effect becoming more evident between the 0.20 and 0.90 quantiles. The results further highlight that effective governance significantly impacts the inverse linkage between renewable energy consumption and carbon emissions. Such a moderating effect is most pronounced in the middle and upper quantiles, where better institutions will have a higher probability of converting renewable energy policies into positive environmental results. In addition, this study employs income-segmented MMQR analysis to highlight the extent to which the drivers of carbon emissions differ across economic groups. These findings emphasize the need for a multidimensional policy approach that unites renewable energy promotion and institutional quality enhancements. Thereby, the study contributes to the existing body of literature by offering quantile-specific insights for formulating focused and effective emission-reduction policies.