Determinants of Renewable Energy Consumption in Asia: The Role of Institutional Quality and Evidence from the Linear and Non-Linear Analyses

Abstract This study examines the impact of economic growth, CO2 emissions, trade openness, and financial development on renewable energy consumption from 1998 to 2020 in 30 Asian countries, divided into two groups of low institutional quality and high institutional quality. The research methods include two-step Generalized Method of Moments, Panel-Corrected Standard Errors, and Feasible Generalized Least Square estimation methods for linear empirical investigation and the dynamic panel threshold model for non-linear investigation. The results show that there is a positive relationship between economic growth and institutional quality with renewable energy consumption. Specifically, countries with high economic growth, financial development, and institutional quality will have higher renewable energy consumption. In contrast, countries with low institutional quality that increase CO2 emissions tend to hinder renewable energy consumption. Meanwhile, trade openness has no significant impact on renewable energy consumption regardless of the institutional quality of the country.