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How institutional quality shapes the impact of renewable energy adoption on eco-economic sustainability in Asia

Year: 2026

Type: article

Abstract: This study examines the relationship between renewable energy adoption and eco-economic sustainability, focusing on both environmental performance (CO₂ emissions) and economic performance (GDP), and evaluates whether institutional quality moderates these relationships in Asian economies. Using panel data from 46 Asian countries over the period 2002–2023, the study employs fixed-effects estimation along with several robustness checks. The results indicate that renewable energy adoption is associated with a significant reduction in CO₂ emissions, but a negative association with economic growth, suggesting the presence of short-term transition costs during the energy shift. The empirical results indicate that renewable energy adoption significantly reduces CO₂ emissions (β = −0.019, p < 0.05) but is also associated with a decline in GDP per capita (β = −0.018, p < 0.01). Moreover, institutional quality significantly moderates these relationships by strengthening the environmental benefits of renewable energy adoption while mitigating its adverse economic effects. This suggests that stronger governance frameworks can help economies better manage the transition toward clean energy systems. These findings highlight that renewable energy alone does not automatically generate balanced sustainability outcomes; rather, effective institutional environments are essential for translating renewable energy investments into both environmental improvements and long-term economic benefits. The study contributes to the literature by providing a dual-outcome perspective on eco-economic sustainability and emphasizing the role of governance in shaping renewable energy transitions in Asian economies. The results offer important policy implications for strengthening institutional capacity to support both environmental protection and sustainable economic development.

Source: Discover Sustainability

DOI: 10.1007/s43621-026-04523-9

Authors: Muskan Sahu, Twinkle Prusty

Institution: Banaras Hindu University

Language: English

Topic: Energy, Environment, Economic Growth

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDGs: Climate action, Affordable and clean energy, Industry, innovation and infrastructure, Decent work and economic growth

Open Access status: gold

Estimated APC paid: $1,390