RENEWABLE ENERGY, GOVERNANCE QUALITY AND ECOLOGICAL SUSTAINABILITY: EVIDENCE FROM 15 ASIAN ECONOMIES

Abstract

Reconciling economic development with ecological limits requires understanding how energy composition and institutional quality relate to ecological sustainability (ES). This study investigates the relationships of renewable energy consumption (REC) and governance quality (GOV) with the load capacity factor (LCF) in 15 selected Asian economies from 2002 to 2022, controlling for real GDP per capita (GDP) and trade openness (TO). GOV is constructed through principal component analysis (PCA) of six Worldwide Governance Indicators. Static common correlated effects mean group (CCEMG) estimation accommodates heterogeneous country responses and unobserved common factors, while augmented mean group (AMG) estimation provides a robustness check. The results associate REC and GOV positively with LCF, whereas GDP exhibits a negative association. TO also shows a negative association, with weaker statistical support at the 10% significance level. AMG estimates support the principal coefficient directions and significance patterns. These findings highlight the relevance of renewable energy and institutional quality to ES and suggest that economic expansion should be accompanied by measures to address ecological pressures.