INVESTIGATING THE RELATIONSHIP BETWEEN RENEWABLE ENERGY CONSUMPTION AND GREENHOUSE GAS EMISSIONS IN VIETNAM

Abstract

The paper aims to investigate the relationship between renewable energy consumption (REC) and greenhouse gas (GHG) emissions in Vietnam, in relation to two socio-economic variables namely population (POP) and foreign direct investment (FDI). The study applies a time series analysis approach, exploiting data sources collected and processed from the World Bank (WB) in the period 1990 - 2021. The autoregressive distributed lag (ARDL) model is properly chosen to quantitatively analyse in this study. The results of the Bounds test show that cointegration exists in both ARDL models regressing the natural logarithm of renewable energy consumption (LnREC) and the natural logarithm of greenhouse gas emissions (LnGHG). Hence, there exists a long-term correlation between REC and GHG, as well as between them and the explanatory variables of POP and FDI. In terms of causal effects, by using t-Tests and F-Tests (Wald's test) for the parameters estimated in the general equations and error correction equations. The results show that the causal relationship between REC and GHG exists bidirectionally in the short term, but there is not any long-run causal relationship between them.