IDEAS home Printed from https://ideas.repec.org/a/eee/riibaf/v81y2026ics027553192500474x.html

Analyzing the dynamic impact of energy aid on energy transition in South Asia: Policy implications for renewable adaptive capacity and energy decarbonization

Author

Listed:
  • Bashir, Muhammad Farhan
  • Jamaani, Fouad
  • Wang, Jue
  • Huang, Huan

Abstract

The global call for energy decarbonization and environmental progress requires augmented financial support to fund climate adaption and withstand climate change ramifications. The current study uses a balanced panel dataset to investigates the role of energy aid in expediting energy transition in South Asian economies from 2002 to 2022. Our extensive econometric analysis helps us determine that energy aid is essential to promoting energy transition in South Asia. from macroeconomic perspective, energy efficiency, institutional quality and human development help foster energy transition through green energy developments whereas, population growth, foreign direct investments and economic growth hinder energy transition. We further substitute energy aid sub-components within the empirical model to conclude that renewable energy aid, non-renewable energy aid, energy policy aid, and energy distribution aid are key to the structural energy shifts and facilitate long-term energy transition process. We conclude our investigation by reporting novel policy suggestions to energy aid distribution aimed at donors and recipients alike to augment energy aid’s efficacy in net-zero transition and climate change adaptation

Suggested Citation

  • Bashir, Muhammad Farhan & Jamaani, Fouad & Wang, Jue & Huang, Huan, 2026. "Analyzing the dynamic impact of energy aid on energy transition in South Asia: Policy implications for renewable adaptive capacity and energy decarbonization," Research in International Business and Finance, Elsevier, vol. 81(C).
    • Handle: RePEc:eee:riibaf:v:81:y:2026:i:c:s027553192500474x
    DOI: 10.1016/j.ribaf.2025.103218
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S027553192500474X
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ribaf.2025.103218?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Lin, Boqiang & Chen, Yufang, 2019. "Does electricity price matter for innovation in renewable energy technologies in China?," Energy Economics, Elsevier, vol. 78(C), pages 259-266.
    2. Ren, Xiaohang & Hong, Keyi & Tao, Lizhu, 2025. "Driving a green future: Spatial econometric analysis of climate finance aid in renewable energy transition in developing countries," Economic Analysis and Policy, Elsevier, vol. 86(C), pages 929-949.
    3. Zahoor Ahmed & Muhammad Mansoor Asghar & Muhammad Nasir Malik & Kishwar Nawaz, 2020. "Moving towards a sustainable environment: The dynamic linkage between natural resources, human capital, urbanization, economic growth, and ecological footprint in China," Post-Print hal-03557938, HAL.
    4. Nassani, Abdelmohsen A. & Aldakhil, Abdullah Mohammed & Zaman, Khalid, 2021. "Ecological footprints jeopardy for mineral resource extraction: Efficient use of energy, financial development and insurance services to conserve natural resources," Resources Policy, Elsevier, vol. 74(C).
    5. Aydin, Mehmet & Degirmenci, Tunahan & Erdem, Azad & Sogut, Yasin & Demirtas, Nazli, 2024. "From public policy towards the green energy transition: Do economic freedom, economic globalization, environmental policy stringency, and material productivity matter?," Energy, Elsevier, vol. 311(C).
    6. Wu, Bao & Ren, Kangjun & Fu, Yao & He, Defeng & Pan, Mengmeng, 2024. "Institutional investor ESG activism and green supply chain management performance: Exploring contingent roles of technological interdependences in different digital intelligence contexts," Technological Forecasting and Social Change, Elsevier, vol. 209(C).
    7. Wei, Tie & Pan, Huaihong & Duan, Zhicheng & Xie, Pin, 2024. "New energy technology innovation and energy poverty alleviation in China," Renewable Energy, Elsevier, vol. 235(C).
    8. Li, Gen & Luo, Zhiyuan & Liao, Chaohao, 2025. "Power capacity optimization and long-term planning for a multi-energy complementary base towards carbon neutrality," Energy, Elsevier, vol. 334(C).
    9. Muhammad Farhan Bashir & Fouad Jamaani & Ciro Troise & Stefano Bresciani, 2025. "Assessing the Impact of Environmental Taxes, Energy Structure and Renewable Energy Investments on Climate Change: Empirical Evidence From Top‐10 Polluting Economies," Sustainable Development, John Wiley & Sons, Ltd., vol. 33(6), pages 8174-8189, December.
    10. Liao, Tailai & Yan, Jingdong & Zhang, Qiuhong, 2024. "The impact of green technology innovation on carbon emission efficiency: The intermediary role of intellectual capital," International Review of Economics & Finance, Elsevier, vol. 92(C), pages 520-532.
    11. Dong, Kangyin & Dong, Xiucheng & Jiang, Qingzhe & Zhao, Jun, 2021. "Assessing energy resilience and its greenhouse effect: A global perspective," Energy Economics, Elsevier, vol. 104(C).
    12. Dornan, Matthew & Shah, Kalim U., 2016. "Energy policy, aid, and the development of renewable energy resources in Small Island Developing States," Energy Policy, Elsevier, vol. 98(C), pages 759-767.
    13. Liu, Yang & Dong, Kangyin & Taghizadeh-Hesary, Farhad, 2023. "How does energy aid mitigate the recipient countries’ carbon emissions?," Economic Analysis and Policy, Elsevier, vol. 79(C), pages 359-375.
    14. Siman Xie & Fouad Jamaani & Muhammad Farhan Bashir, 2025. "Natural Resources Consumption, Renewable Energy Investments and Digital Infrastructure: Analyzing Climate Change in Top‐10 Resource Consuming Economies," Sustainable Development, John Wiley & Sons, Ltd., vol. 33(4), pages 6328-6342, August.
    15. Sun, Yunpeng & Pal, Shreya & Mahalik, Mantu Kumar & Gozgor, Giray, 2025. "Empowering sustainable future in OECD economies: Aligning humanitarian aid with energy generation," Technological Forecasting and Social Change, Elsevier, vol. 216(C).
    16. Sacchidananda Mukherjee & Debashis Chakraborty, 2009. "Environment, human development and economic growth: a contemporary analysis of Indian states," International Journal of Global Environmental Issues, Inderscience Enterprises Ltd, vol. 9(1/2), pages 20-49.
    17. Dong, Kangyin & Jiang, Qingzhe & Liu, Yang & Shen, Zhiyang & Vardanyan, Michael, 2024. "Is energy aid allocated fairly? A global energy vulnerability perspective," World Development, Elsevier, vol. 173(C).
    18. William Nordhaus, 2019. "Climate Change: The Ultimate Challenge for Economics," American Economic Review, American Economic Association, vol. 109(6), pages 1991-2014, June.
    19. Lee, Heerae & Shon, Huijoo, 2024. "Spatial and temporal patterns of energy aid and poverty in four African countries: Focusing on distributive and recognition justice," Renewable and Sustainable Energy Reviews, Elsevier, vol. 192(C).
    20. Jain, Panika & Bardhan, Samaresh, 2023. "Some factors of energy aid volatility across developing countries: A special focus on renewable sector," Energy Policy, Elsevier, vol. 178(C).
    21. Fraccalvieri, Ilenia & Raimo, Nicola & Vitolla, Filippo & Bussoli, Candida, 2025. "Steering the energy transition: Governance and renewable energy in global banking," Research in International Business and Finance, Elsevier, vol. 80(C).
    22. Jain, Panika & Bardhan, Samaresh, 2024. "Sustainable energy deployment in developing countries: The role of composition of energy aid," Economic Systems, Elsevier, vol. 48(3).
    23. Michael A. Clemens & Steven Radelet & Rikhil R. Bhavnani & Samuel Bazzi, 2012. "Counting Chickens when they Hatch: Timing and the Effects of Aid on Growth," Economic Journal, Royal Economic Society, vol. 122(561), pages 590-617, June.
    24. Ma, Beiling & Sharif, Arshian & Bashir, Madiha & Bashir, Muhammad Farhan, 2023. "The dynamic influence of energy consumption, fiscal policy and green innovation on environmental degradation in BRICST economies," Energy Policy, Elsevier, vol. 183(C).
    25. Ahmed, Zahoor & Asghar, Muhammad Mansoor & Malik, Muhammad Nasir & Nawaz, Kishwar, 2020. "Moving towards a sustainable environment: The dynamic linkage between natural resources, human capital, urbanization, economic growth, and ecological footprint in China," Resources Policy, Elsevier, vol. 67(C).
    26. Sandrine Kablan & Valérie Chouard, 2022. "Does climate aid matter for reducing CO2 emissions? The case of foreign aid for renewable energy," Applied Economics, Taylor & Francis Journals, vol. 54(46), pages 5357-5372, October.
    27. Yao, Xing & Yasmeen, Rizwana & Hussain, Jamal & Hassan Shah, Wasi Ul, 2021. "The repercussions of financial development and corruption on energy efficiency and ecological footprint: Evidence from BRICS and next 11 countries," Energy, Elsevier, vol. 223(C).
    28. Song Jiang & Xiaoqin Yuan, 2025. "Does green credit promote real economic development? Dual empirical evidence of scale and efficiency," PLOS ONE, Public Library of Science, vol. 20(8), pages 1-26, August.
    29. Mahalik, Mantu Kumar & Villanthenkodath, Muhammed Ashiq & Mallick, Hrushikesh & Gupta, Monika, 2021. "Assessing the effectiveness of total foreign aid and foreign energy aid inflows on environmental quality in India," Energy Policy, Elsevier, vol. 149(C).
    30. Sun, Yunpeng & Guan, Weimin & Razzaq, Asif & Shahzad, Mohsin & Binh An, Nguyen, 2022. "Transition towards ecological sustainability through fiscal decentralization, renewable energy and green investment in OECD countries," Renewable Energy, Elsevier, vol. 190(C), pages 385-395.
    31. Xu, Jialong & Moslehpour, Massoud & Tran, Trung Kien & Dinh, Khai Cong & Ngo, Thanh Quang & Huy, Pham Quang, 2023. "The role of institutional quality, renewable energy development and trade openness in green finance: Empirical evidence from South Asian countries," Renewable Energy, Elsevier, vol. 207(C), pages 687-692.
    32. Paul Bertheau & Robert Lindner, 2022. "Financing sustainable development? The role of foreign aid in Southeast Asia's energy transition," Sustainable Development, John Wiley & Sons, Ltd., vol. 30(1), pages 96-109, February.
    33. Nicholas Apergis & Mehmet Pinar & Emre Unlu, 2024. "Does classification of green aid flows matter for environmental quality?," Empirical Economics, Springer, vol. 66(1), pages 53-73, January.
    34. Kim, Jung Eun, 2018. "Technological capacity building through energy aid: Empirical evidence from renewable energy sector," Energy Policy, Elsevier, vol. 122(C), pages 449-458.
    35. Betzold, Carola, 2016. "Fuelling the Pacific: Aid for renewable energy across Pacific Island countries," Renewable and Sustainable Energy Reviews, Elsevier, vol. 58(C), pages 311-318.
    36. Masako Ikegami & Zijian Wang, 2021. "Does energy aid reduce CO2 emission intensities in developing countries?," Journal of Environmental Economics and Policy, Taylor & Francis Journals, vol. 10(4), pages 343-358, October.
    37. Umar Farooq, 2023. "Exploring the external forces driving green environmental innovation: empirical evidence from Asian market," Economic Change and Restructuring, Springer, vol. 56(2), pages 981-1006, April.
    38. Salari, Mahmoud & Javid, Roxana J. & Noghanibehambari, Hamid, 2021. "The nexus between CO2 emissions, energy consumption, and economic growth in the U.S," Economic Analysis and Policy, Elsevier, vol. 69(C), pages 182-194.
    39. Min Shang & Ji Luo, 2021. "The Tapio Decoupling Principle and Key Strategies for Changing Factors of Chinese Urban Carbon Footprint Based on Cloud Computing," IJERPH, MDPI, vol. 18(4), pages 1-17, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Xu, Xiao-Yu & Peng, Jia-Hui & Wang, Ke-Liang & Zhang, Zhen-Hua, 2025. "Is energy aid a panacea for energy poverty? Evidence from developing countries," Energy Policy, Elsevier, vol. 206(C).
    2. Muhammad Farhan Bashir & Fouad Jamaani & Jue Wang & Huan Huang, 2026. "Examining the Role of Energy Aid, Energy Efficiency and Human Development in Climate Change Mitigation: Policy Implications for Sustainable Development in Emerging African Economies," Sustainable Development, John Wiley & Sons, Ltd., vol. 34(1), pages 768-784, February.
    3. Dong, Kangyin & Jiang, Qingzhe & Liu, Yang & Shen, Zhiyang & Vardanyan, Michael, 2024. "Is energy aid allocated fairly? A global energy vulnerability perspective," World Development, Elsevier, vol. 173(C).
    4. Liu, Yang & Dong, Kangyin & Taghizadeh-Hesary, Farhad, 2023. "How does energy aid mitigate the recipient countries’ carbon emissions?," Economic Analysis and Policy, Elsevier, vol. 79(C), pages 359-375.
    5. Wang, Shubin & Zhao, Erlong & Razzaq, Hafiz Kashif, 2022. "Dynamic role of renewable energy efficiency, natural resources, and climate technologies in realizing environmental sustainability: Implications for China," Renewable Energy, Elsevier, vol. 198(C), pages 1095-1104.
    6. Jeong Won Kim & Jae-Seung Lee, 2021. "Greening Energy Finance of Multilateral Development Banks: Review of the World Bank’s Energy Project Investment (1985–2019)," Energies, MDPI, vol. 14(9), pages 1-23, May.
    7. Sun, Chuanwang & Khan, Anwar & Cai, Weiyi, 2024. "The response of energy aid and natural resources consumption in load capacity factor of the Asia Pacific emerging countries," Energy Policy, Elsevier, vol. 190(C).
    8. Murat Cetin & Ilhan Ozturk & Sevgi Sumerli Sarigul & Muntasir Murshed & Emine Kilavuz, 2025. "Nexus between technological innovation and environmental pollution in selected OECD countries," Natural Resources Forum, Blackwell Publishing, vol. 49(1), pages 841-862, February.
    9. Wu, Guoyong & Gao, Yue & Feng, Yanchao, 2023. "Assessing the environmental effects of the supporting policies for mineral resource-exhausted cities in China," Resources Policy, Elsevier, vol. 85(PB).
    10. Appiah, Michael & Li, Mingxing & Sehrish, Saba & Abaji, Emad Eddin, 2023. "Investigating the connections between innovation, natural resource extraction, and environmental pollution in OECD nations; examining the role of capital formation," Resources Policy, Elsevier, vol. 81(C).
    11. Ahmad, Mahmood & Ahmed, Zahoor & Khan, Sana Akbar & Alvarado, Rafael, 2023. "Towards environmental sustainability in E−7 countries: Assessing the roles of natural resources, economic growth, country risk, and energy transition," Resources Policy, Elsevier, vol. 82(C).
    12. Opoku, Eric Evans Osei & Dogah, Kingsley E. & Aluko, Olufemi Adewale, 2022. "The contribution of human development towards environmental sustainability," Energy Economics, Elsevier, vol. 106(C).
    13. Puertas, Rosa & Guaita-Martinez, José M. & Carracedo, Patricia & Ribeiro-Soriano, Domingo, 2022. "Analysis of European environmental policies: Improving decision making through eco-efficiency," Technology in Society, Elsevier, vol. 70(C).
    14. Tzai-Chiao Lee & Muhammad Khalid Anser & Abdelmohsen A. Nassani & Mohamed Haffar & Khalid Zaman & Muhammad Moinuddin Qazi Abro, 2021. "Managing Natural Resources through Sustainable Environmental Actions: A Cross-Sectional Study of 138 Countries," Sustainability, MDPI, vol. 13(22), pages 1-19, November.
    15. Opeoluwa Seun Ojekemi & Mehmet Ağa & Cosimo Magazzino, 2023. "Towards Achieving Sustainability in the BRICS Economies: The Role of Renewable Energy Consumption and Economic Risk," Energies, MDPI, vol. 16(14), pages 1-18, July.
    16. Alfalih, Abdulaziz Abdulmohsen & Hadj, Tarek Bel, 2022. "Financialization, natural resources rents and environmental sustainability dynamics in Saudi Arabia under high and low regimes," Resources Policy, Elsevier, vol. 76(C).
    17. Ahmad, Mahmood & Pata, Ugur Korkut & Ahmed, Zahoor & Zhao, Ruiqi, 2024. "Fintech, natural resources management, green energy transition, and ecological footprint: Empirical insights from EU countries," Resources Policy, Elsevier, vol. 92(C).
    18. Nguyen, Tran Thai Ha & Tu, Yu-Te & Diep, Gia Luat & Tran, Trung Kien & Tien, Nguyen Hoang & Chien, FengSheng, 2023. "Impact of natural resources extraction and energy consumption on the environmental sustainability in ASEAN countries," Resources Policy, Elsevier, vol. 85(PA).
    19. Daohua Wang & Ziheng Niu & Ning Li & Yu Zhang & Zongsen Zou, 2025. "Dynamic nexus between natural resource rents, economic growth, and environmental quality: A comparative study between China and the US," Natural Resources Forum, Blackwell Publishing, vol. 49(3), pages 3140-3163, August.
    20. Pata, Ugur Korkut & Ertugrul, Hasan Murat, 2023. "Do the Kyoto Protocol, geopolitical risks, human capital and natural resources affect the sustainability limit? A new environmental approach based on the LCC hypothesis," Resources Policy, Elsevier, vol. 81(C).

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:riibaf:v:81:y:2026:i:c:s027553192500474x. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ribaf .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.