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Fuelling the Future: Decoding the Influence of Monetary Policy on Asia’s Clean Energy Investment

In: Future of Economy in Asia

Author

Listed:
  • Maggie May-Jean Tang

    (Swinburne University of Technology, School of Business)

  • Kwang-Jing Yii

    (Swinburne University of Technology, School of Business)

  • Siew-Ling Liew

    (Swinburne University of Technology, School of Foundation Studies)

Abstract

Rapid global economic evolution has driven industrialisation and urbanisation, driving up energy demands and fossil fuel consumption. This surge exacerbates environmental concerns, notably climate change, environmental degradation, and carbon emissions. Transitioning to clean energy is vital for achieving sustainable growth and combating climate challenges. Asia presently accounts for half of the world’s carbon emissions. To achieve the ambitious target of net-zero emissions by 2050, it is essential to comprehensively examine the driving forces behind the clean energy transition in Asia. According to the International Energy Agency (IEA 2023), to meet the ambitious target, annual investments in clean energy need to scale up significantly from $62.3 billion in 2022 to $138.6 billion in 2030 and further surge to $165.8 billion in 2035. Monetary policy shocks have been a significant driver of uncertainty in financial markets. It influences economic dynamics and investment patterns across various sectors, including clean energy. Studying its impact on clean energy investment could offer valuable insight for policymakers to expedite the energy transition. This study examines the influence of monetary policy alongside urbanisation, green technology innovation, and green growth on clean energy investment. Using the System Generalised Method of Moments (SYS-GMM) approach, the findings reveal that monetary policy, urbanisation, and green growth have significant positive impacts on clean energy investment across Asia. Conversely, green technology innovation does not demonstrate a significant relationship. These results indicate that favourable monetary policies, urbanisation, and green growth are key pillars in fostering clean energy investments and supporting Asia’s pathway to a greener and more sustainable future development.

Suggested Citation

  • Maggie May-Jean Tang & Kwang-Jing Yii & Siew-Ling Liew, 2025. "Fuelling the Future: Decoding the Influence of Monetary Policy on Asia’s Clean Energy Investment," Springer Books, in: Evan Lau & Weng Marc Lim & Huey Fen Cheong (ed.), Future of Economy in Asia, chapter 0, pages 207-225, Springer.
    • Handle: RePEc:spr:sprchp:978-3-031-95500-6_11
    DOI: 10.1007/978-3-031-95500-6_11
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