Impact of Green Energy Shares Shocks on Economic

What is it about?

The aim of this paper is to measure the impact of green energy shares shocks in electricity generation on Gross Domestic Product (GDP) and environmental deprivation, caused by the changes in carbon dioxide (CO 2) emissions. To estimate the shocks of green energy shares, the study applies the dynamic test of Impulse Response Function (IRF) under the VAR methodology. The estimated results show that, in future the increasing portion of green energy's shares in electricity generation would have positive impacts on the environment, as expected. However, the hikes of utilization of green energy sources would incur more cost to electricity producers and shrivel up the growth of economies through the expansionary effect of industry's consumption and private capital spending in the economy.

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Why is it important?

The findings of the study could suggest a policy recommendation for Malaysia policy makers that to achieve higher economic growth, reducing oil, gas and coal especially in the consumption sectors of the economy and shifting towards indigenous resources would have a beneficial impact on the environment as well as on Malaysia's country balance.