Dynamic linkages among hydroelectricity consumption, economic growth, and carbon dioxide emission in Malaysia

This study investigates the causal relationship between hydroelectricity consumption (HC), economic growth (GDP), and carbon dioxide (CO2) emission in Malaysia by applying the time-series techniques. The major findings for this paper are as follows: (1) long-run relationship exists between HC, GDP, and CO2 emissions. (2) We found a unidirectional causality relationship from HC to CO2 emissions in the short-run while in the long-run causality runs from GDP and HC toward CO2 emissions. (3) The results of the variance decompositions suggest that the impact of HC and CO2 toward GDP becomes noticeable only over the long-run, providing an important policy route map for Malaysia. A step-wise (e.g. combined-use) shift from fossil fuels to Renewable Energy Sources (RESs) seems to be the viable alternative for Malaysia. In this manner, the potential of hydropower for electrification would be the way forward but with caution as the social implication should also be hand in hand with this massive development plan.