Economics of energy transition and electricity consumption in Asia

Energy transition as a major solution for climate change is debated among economists worldwide. This chapter contributes to the existing literature by investigating the impact of energy transition progress on power consumption in Asian countries. The models’ estimations are carried out by the system generalized method of moments (GMM) panel estimator for 35 Asian countries throughout 2000-2019. The major findings confirm that energy transition (migration from fossil fuels to renewable energy sources) positively impacts the electricity consumption of high- and upper-middle-income Asian countries. Furthermore, our results highlight that the sensitivity of electricity consumption in middle- and lower-middle-income Asian countries to inflation, electricity pricing, and population growth is higher than in high- and upper-middle-income Asian countries. The conclusion is that the electricity-energy transition nexus is highly sensitive to countries’ income levels and macroeconomic stability. This implies that Asian countries with different income levels need to first improve economic sustainability and resilience, followed by fossil fuel-to-green energy switch policies and technological efficiency in the power generation sector.