The interplay between clean energy, Fossil Fuels, and load Capacity Factor: Evidence from Asian Developing countries

Abstract

The attainment of the Sustainable Development Goals (SDGs) is a crucial concern for decision-makers not only in developed countries but also in developing countries. The Sustainable Development Goals (SDGs) encompass a range of comprehensive environmental objectives, including addressing air, water, and soil pollution and safeguarding natural resources to mitigate this pollution. To accomplish these objectives, the analysis of carbon emissions and ecological footprint can offer some direction, but they need to consider the supply aspect of nature. The load capacity factor allows for the simultaneous analysis of biocapacity (the natural supply) and ecological footprint to determine if countries surpass the sustainability threshold and identify the elements contributing to this limit. This study aims to analyze the impact of clean and fossil energy consumption along with natural resource rent, foreign direct investment, population and income on the load capacity factor for developing Asian countries from 1990 to 2024. To accomplish this objective, the study uses the novel method of moment quantile regression (MMQR) and examines the load capacity curve hypothesis. Following a U-shaped pattern, our results support the validity of the LCC hypothesis. The MMQR findings indicate that clean energy, NRR, and FDI contribute to environmental quality, whereas population and fossil fuels harm environmental quality. In addition, robustness test by Driscoll-Kraay standard errors validate our earlier results.