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Gas Consumption as a Key for Low Carbon State and its Impact on Economic Growth in Malaysia: ARDL Approach

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  • Temitayo B. Majekodunmi

    (Faculty of Business and Communication, Universiti Malaysia Perlis, Malaysia,)

  • Mohd Shahidan Shaari

    (Faculty of Business and Communication, Universiti Malaysia Perlis, Malaysia,)

  • Nor Fadzilah Zainal

    (Faculty of Business and Management, Universiti Teknologi MARA, Pulau Pinang Campus, Malaysia,)

  • Nor Hidayah Harun

    (Faculty of Business and Management, Universiti Teknologi MARA, Pulau Pinang Campus, Malaysia,)

  • Abdul Rahim Ridzuan

    (Faculty of Business and Management, Universiti Teknologi MARA, Melaka Campus, Malaysia; & Institute for Big Data Analytics and Artificial Intelligence, Universiti Teknologi MARA, Shah Alam Campus, Malaysia; & Centre for Economic Development and Policy, Universiti Malaysia Sabah, Malaysia; & Institute for Research on Socio Economic Policy, Universiti Teknologi MARA, Malaysia; & Accounting Research Institute, Universiti Teknologi MARA, Shah Alam Campus, Malaysia.)

  • Noorazeela Zainol Abidin

    (Faculty of Business and Communication, Universiti Malaysia Perlis, Malaysia,)

  • Nur Hayati Abd Rahman

    (Faculty of Business and Management, Universiti Teknologi MARA, Melaka Campus, Malaysia,)

Abstract

Natural gas consumption contributes the least to CO2 emissions than other non-renewable energy such as oil and coal. Thus, it is important to replace oil in generating economic activities and leading the country towards low carbon state. Despite the environmentally friendly energy, most previous studies did not study gas consumption. Therefore, this study investigates the effects of gas consumption and other selected macroeconomic determinants such as labour, capital, foreign direct investment, trade openness, and financial development on Malaysia's economic growth from 1980 to 2019. The Augmented Distributed Lag (ARDL) approach is employed, and the results show that gas consumption plays a vital role in boosting economic growth in the short and long run. Based on these findings, all economic sectors should consume more natural gas instead of oil, including industries and transportation. This move can conserve the environment and support clean energy for sustainable development. The remaining variables also increased economic growth except for financial development. Based on these outcomes, the country's policymakers can construct a suitable policy that can improve all the potential macroeconomic determinants besides the use of natural gas consumption in accelerating growth in Malaysia.

Suggested Citation

  • Temitayo B. Majekodunmi & Mohd Shahidan Shaari & Nor Fadzilah Zainal & Nor Hidayah Harun & Abdul Rahim Ridzuan & Noorazeela Zainol Abidin & Nur Hayati Abd Rahman, 2023. "Gas Consumption as a Key for Low Carbon State and its Impact on Economic Growth in Malaysia: ARDL Approach," International Journal of Energy Economics and Policy, Econjournals, vol. 13(3), pages 469-477, May.
    • Handle: RePEc:eco:journ2:2023-03-51
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    References listed on IDEAS

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    Cited by:

    1. Shaari, Mohd Shahidan & Majekodunmi, Temitayo B. & Zainal, Nor Fadzilah & Harun, Nor Hidayah & Ridzuan, Abdul Rahim, 2023. "The linkage between natural gas consumption and industrial output: New evidence based on time series analysis," Energy, Elsevier, vol. 284(C).
    2. Liton Chandra Voumik & Salma Akter & Mohammad Ridwan & Abdul Rahim Ridzuan & Amin Pujiati & Bestari Dwi Handayani & J. S. Keshminder & Mohamad Idham Md Razak, 2023. "Exploring the Factors behind Renewable Energy Consumption in Indonesia: Analyzing the Impact of Corruption and Innovation using ARDL Model," International Journal of Energy Economics and Policy, Econjournals, vol. 13(5), pages 115-125, September.

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    More about this item

    Keywords

    gas consumption; economic growth; sustainable development; low carbon state;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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