DOES ENERGY INTENSITY STRENGTHEN THE INDUSTRIALIZATION–ENVIRONMENTAL DEGRADATION NEXUS? EVIDENCE FROM SELECTED ASIAN ECONOMIES

Abstract

With the growth of Asia's industry, concerns over carbon emissions and energy usage have grown. The aim of this study is to test whether the relationship between industrialization and CO₂ emissions remains constant when energy intensity varies within the Asian economies analyzed for the period 2000–2021. Driscoll–Kraay standard errors to account for heteroskedasticity, serial correlation, and cross-sectional dependence. The results indicate that there is a positive relationship between industrialization and energy intensity and CO₂ emissions, while there is a negative relationship between renewable energy consumption and emissions. The main result is that the relationship between industrialization and energy intensity is positive and very strong, meaning that the industrialization process becomes more intensive in energy consumption as energy intensity increases. This is confirmed by the marginal effects estimates: at low energy intensity levels, there is no statistically significant link between industrialization and emissions, while the link is positive and gradually more pronounced at average and high energy intensity levels. The results indicate that reduction in energy intensity is one of the key factors for cleaner industrial development in the selected Asian economies.