Gondwana Research 127 (2024) 65–76

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Gondwana Research
journal homepage: www.elsevier.com/locate/gr

Sustainable energy and environmental sustainability in selected Asia

Pacific Economic Cooperation countries q
Shuxia Zhang a, Deyue Kong a, Bilal b,⇑, Bushra Komal c
a
Hunan University of Science and Technology, China
b
Collaborative Innovation Center for Emissions Trading System Co-constructed by the Province and Ministry, Accounting School, Hubei University of Economics, China
c
University of International Business and Economics, China

a r t i c l e i n f o a b s t r a c t

Article history: Global environmental threats from human accomplishments are becoming most complex and inter-
Received 15 November 2022 linked, with widespread repercussions for people, ecosystems, and economies. We investigate the impact
Revised 3 March 2023 of low-carbon electricity production and international trade on environmental sustainability in selected
Accepted 31 March 2023
Asia Pacific Economic Cooperation (APEC) countries, using economic growth and government expendi-
Available online 4 April 2023
ture as moderators from 1990 to 2019. Comprehensive empirical analysis and second-generation
advanced econometric methodologies are applied to this study. Our results signify that low-carbon elec-
Keywords:
tricity production is negatively associated, while economic growth, international trade, and government
Low-carbon electricity production
Resource-efficient Economic Growth
expenditure are positively related to environmental sustainability. Moreover, low-carbon electricity pro-
International trade duction improves, while economic growth, international trade, and government expenditure deteriorate
Environmental Sustainability the environmental sustainability in selected APEC countries. This empirical evidence suggests that APEC
APEC Countries countries should broaden low-carbon energy policies to accelerate renewable energy technology and
industry system evolution, encouraging breakthrough technological innovations and industrialization
of wind power, solar power, and bio-liquid fuels. Research limitations and directions discussed.
Ó 2023 International Association for Gondwana Research. Published by Elsevier B.V. All rights reserved.

1. Introduction In addition to modernizing their resources and improving asset

proficiency, energy utilities that use non-renewable fossil fuels
Environmental protection has become a common strategy and have significantly enhanced their asset performance. However, this
understanding for all countries, serving as a foundation for human multidimensional transition was relatively slow to limit exposure
existence and sustainability. (Bhattacharya, 2020). Energy policy, to environmental change’s worst impacts, despite revised policy
planning, and analysis must address sustainable development aspirations, conductive innovations, and encouraging investments
and climate change (International Energy Agency, 2020a). To tran- in low-carbon capabilities (Awan et al., 2022). From the perspec-
sition from a carbon-intensive and unreliable sector to a clean, tive of a more inclusive and cleaner energy future, the world is
resilient, and sustainable one, we must use renewable energy not on the target of meeting energy-concerned components of sus-
sources more effectively (Bashir et al., 2023; Adebayo et al., tainable development goals (SDGs) (International Energy Agency,
2022; Hassan et al., 2022b). Renewables, including solar, hydro, 2020b). In 2019, renewable energy production rose 6 percent, with
biofuels, wind, etc., are central to the energy transition to a more solar PV and wind technologies representing 64 percent of this
sustainable energy system and less carbon-intensive (Ahmad increment. Though the renewable energy sector in the worldwide
et al., 2022). Policymakers worldwide also recognize the climate energy sector reached almost 27 percent in 2019, the renewable
mitigation benefits of such low-carbon renewable energy sources. sector overall needs to extend significantly to achieve the SDGs tar-
get of nearly 50 percent of total energy generation by 2030 (Ali
et al., 2022; Cai et al., 2022).
q
We acknowledge the financial support from the Collaborative Innovation Center The leading cause of global environmental change is carbon
for Emissions Trading system Co-constructed by the Province and Ministry project, dioxide (CO2) emissions. Since 1751, the world has produced over
Research on accounting standard carbon emission right (22CICETS-YB017). We also 1.5 trillion tons of CO2 emissions. It is generally accepted to avert
acknowledge the supoort of Accounting Dvelopment Research Center of the Hubei the worst effects of environmental change and achieve the envi-
University of Economics.
⇑ Corresponding author. ronmental objective of restricting average temperature ascending
E-mail address: [email protected] ( Bilal). to 2 °C. The world needs to decrease emissions expeditiously (Liu

https://doi.org/10.1016/j.gr.2023.03.024
1342-937X/Ó 2023 International Association for Gondwana Research. Published by Elsevier B.V. All rights reserved.
S. Zhang, D. Kong, Bilal et al. Gondwana Research 127 (2024) 65–76

et al., 2022b, 2022a). Additionally, a small portion of environmen- and the climate, despite the significant effect public spending
tal deterioration, carbon footprint, and ecological footprint are also may have. Government expenditures can have a direct and indi-
involved, representing climate change (Ulucak et al., 2020). Carbon rect impact on the environment. Higher government expendi-
footprint is a measure of CO2 emission related to all the exercises of tures will likely increase inequality, resulting in higher demand
an individual or other elements like buildings, enterprises, coun- for quality environments (Bilal et al., 2022; Khan et al., 2022a).
tries, etc (Bashir et al., 2023; Ma et al., 2023; Bilal et al., 2022). It López et al. (2011) expressed that government expenditure’s
incorporates the total amount of greenhouse gases such as nitrous four-dimensional effects may affect environmental sustainability
oxide, methane, and chlorofluorocarbons generated from human differently. Scale effect: expanded environmental pressure
actions on the earth (Azam et al., 2022; Y. Zhang et al., 2022). By because of more economic growth. Composition effect: expanded
2050, the carbon footprint must drop from 16 tons per year to human resources in place of physical capital and concentrated
under 2 tons to avoid a 2 °C rise in global temperature (The industrialization that hurt the climate more. Technology effect:
Nature Conservancy, 2021). because of higher labor proficiency. Income effect: A better and
Global Footprint Network (GFN) supports ecological footprint- more quality environment is demanded by people with
ing as a process of measuring anthropological demand for increased income.
environmental-related services due to natural capital. Ecological A detailed study of APEC nations is essential as APEC has grown
footprints estimate how much natural resources are in need into one of the most important regional forums and a robust eco-
and how much is being supplied (Hussain et al., 2023; Liu nomic growth engine. APEC is the head platform for encouraging
et al., 2022c; Zahoor et al., 2022b). As part of the demand side, and protecting growth, facilitating free trade liberalization, and
environmental resources such as Plants and fibers, animals, fish, green investments to ensure sustainable development in the
wood, and other forest products, infrastructure, and waste man- region (APEC, 2010). In 2011 APEC economies were determined
agement are quantified (Global Footprint Network, 2016). How- to decrease energy intensity by 45% and twofold the renewable
ever, in this study, we have checked the aggregative energy sector by 2030 (Taghizadeh-Hesary et al., 2022; Zakari
antecedents of environmental sustainability by combining all and Khan, 2022a). However, the developing energy interests in
these crucial indicators using Principal Component Analysis the APEC economies are invigorating their trade activities and
(PCA). environmental degradation (Le et al., 2017). Oil consumption and
Using data from the selected APEC countries, this paper production patterns in APEC countries are shown in Figs. 1 and 2.
addresses how much low-carbon electricity production affects Energy consumption and production are dominated by APEC
environmental sustainability. Progress toward low-carbon energy economies, which consume 50% of the world’s energy, generate
production systems has been evident, but it has been slow. How- 63% of its electricity, and supply 60.3% of its primary energy (Sun
ever, it erratically dispersed to preclude the most severe waves et al., 2019). Fig. 3 shows the low-carbon energy supply patterns
of environmental change (International Atomic Energy Agency, in APEC countries (Khan et al., 2021a, 2021b). The APEC countries’
2019). The worldwide electricity sector’s decarburization process contribution to the world energy exports expanded from 28.7% in
is too slow, and the contribution of low-carbon electricity in 2000 to 36.1% in 2018, involved in 50% to 71% of virtual flows of
2016 was just two percent higher than in 2010. Worldwide, 36.4 energy and greenhouse gases, and enlarged environmental and
percent of the total energy production arises from low-carbon economic disparity (Khan et al., 2022b; Lyu et al., 2022; Zahoor
sources (LowCarbonPower, 2019). et al., 2022a; Zaidi et al., 2019). The literature generally has over-
Along with the critical availability of clean energy, at least 80 looked the ecological impact of low-carbon electricity production.
percent of mitigating efforts are needed to meet Paris Agreement A study examining the effects of low-carbon electricity production,
objectives by 2030. Low-carbon electricity is a recurrently scarce international trade, and government expenditures from 1990 to
commodity. Just 10 percent of countries represent over 70 percent 2019 on environmental sustainability in selected APEC nations
of low-carbon electricity generation worldwide. Globally, non- are presented in this report.
renewable fossil fuels generate two-thirds of electricity This study contributes to the literature in the following ways.
(International Atomic Energy Agency, 2019). The most significant This study uses three environmental sustainability indicators:
low-carbon energy sources in 2018 are hydropower and nuclear CO2 emissions, ecological and carbon footprint. All three indices
power, with the latter giving more than half of the low-carbon measure environmental sustainability performance. Moreover,
energy alone (International Atomic Energy Agency, 2020). unlike earlier studies, we have created a PCA index of all these
The second important aspect this study highlights concerns three crucial indicators. We estimated the environmental sustain-
international trade with the selected APEC country’s environ- ability index as a dependent variable to examine its aggregative
mental sustainability. Expanding world trade, increasing global antecedents. The existing literature usually discusses the con-
value chains, and modifying trade patterns impact the environ- sumption aspects of fossil fuels or low-carbon renewables; how-
ment by degrading natural resources or raising pollution ever, this study complements current research by incorporating
(Arslan et al., 2022; Zakari et al., 2022a). International trade low-carbon electricity production transition for the APEC nations.
may also directly affect the climate due to economic growth. APEC countries’ emissions inequality is analyzed based on govern-
As trade liberalization expands, emissions-intensive activities ment expenditures. The degree and direction of government
are specialized across states due to varying environmental poli- expenditure are becoming increasingly essential measures within
cies (OECD, 2020). Over 7% of global CO2 emissions are attributed APEC to manage regional emissions disparities. Trade policy
to international trade-related transportation freight. Estimates arrangements in the APEC region are allied with environmental
that the volume of freight trade-related emissions will increase mitigation objectives and how they affect future ecological sus-
to 8131 million tons by 2050 from 2018 million tons in 2010. tainability. For estimating long-run returns, the study uses a com-
Environmental sustainability goals may be seriously compro- bination of linear regression correlated; panel corrected standard
mised by such profound emission growth (Hassan et al., errors (PCSE), and random effect generalized least squares (RE-
2022a; Khan et al., 2022c). GLS).
This study addresses a third essential question concerning Here are the remaining parts of the paper. Section 2 reviews the
how government expenditure in the selected APEC economies literature. In Section 3, we present the methodology and the mate-
influences environmental sustainability. The literature has not rial. In Section 4, we offer the results and discuss them. Section 5
focused widely on the relationship between public spending concludes the paper.
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S. Zhang, D. Kong, Bilal et al. Gondwana Research 127 (2024) 65–76

Fig. 1. APEC oil consumption.

Fig. 2. APEC oil production.

2. Literature review non-renewable energy instead of renewable energy has been

explored by Mohsin et al. (2021). From 2000 to 2016, robust linear
Modernized production processes rely heavily on energy to regressions and Hausman-Taylor regressions were used. Green-
achieve sustainable economic growth. According to Mahjabeen house gas emissions are associated with non-renewable energy
et al., 2020, low-carbon renewable sources are more sustainable consumption, while greenhouse gas emissions are reduced by
from an environmental perspective than fossil fuels (Mahjabeen renewable energy consumption (Yang and Khan, 2022; Zakari
et al., 2020). Numerous researchers have sought to discover the and Khan, 2022b). It was confirmed that renewable energy con-
ecological consequences of environmentally friendly renewable sumption is important in shaping ecological sustainability using
energy sources. In twenty-five developing Asian countries, using second-generation econometric methodologies. Assi et al. (2021)

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Fig. 3. Low carbon energy supply.

state that ASEAN economies consumed renewable energy from environmental public expenditure in 30 provinces of China from
1998 to 2018. They established that ecological contaminants nega- 2000 to 2015.
tively correlate with renewable energy consumption using an Similarly, Zhang et al. (2017) examined whether government
autoregressive distributed lag model (ARDL) (Caglar, 2020). Envi- expenditures affected China’s environmental sustainability from
ronmental degradation is significantly associated with renewable 2000 to 2014. Using dynamic GMM, they illustrated the U-
energy consumption according to quantile regressions. It was shaped interactions and demonstrated that the indirect effect of
reported, however, that Mahjabeen et al. (2020) found that both government expenditure on environmental sustainability is more
are renewable. dominating than the direct effects. Adom and Adams (2020) stud-
Global trade has changed in such a way that trade liberalization ied technical fossil fuels energy efficiency and government expen-
has sparked debate as to whether it could harm the sustainability diture interactions in 28 African countries from 1988 to 2016. They
of the global environment. Environmental sustainability and inter- illustrated that growing government expenditure decreases spe-
national trade have mixed results in the literature. Grossman and cialized fossil fuels’ energy efficiency. Thus, the studied literature
Krueger (1991) state that income and trade increase pollution discusses different aspects of government expenditure on various
intensity. In contrast, Gale and Mendez (1998) argued that trade parts of the environment. However, very little literature is found
liberalization negatively impacts environmental degradation investigating the environmental sustainability aspects purely,
(Dinda and Coondoo, 2006; Mani and Wheeler, 1998). Based on and this study fills the gap.
coefficient panel data modelling, (Chen et al., 2023) studied how
international trade promoted CO2 emissions. They revealed the 3. Material and theoretical background
non-linear association between international trade and environ-
mental degradation, and global trade impact CO2 emissions differ- This study examines the impact of low-carbon electricity pro-
ently in different income group countries. Thus, the literature on duction and trade on environmental sustainability in selected APEC
the interaction between international business and ecological sus- countries from 1990 to 2019, using government expenditure and
tainability concentrated on several related problems. However, the economic growth as mediating variables. The selected 15 APEC
environmental impact of international trade is poorly understood. countries are Australia, Canada, Chile, China, Indonesia, Japan, Kor-
It is still in its infancy to determine how various international bod- ean Republic, Mexico, New Zealand, Peru, Philippines, Russian Fed-
ies and government efforts affect the environment regarding trade eration, Singapore, Thailand, and United States. Six countries,
patterns and policies. Overall, the studied literature has diverse Brunei Darussalam, Macao SAR China, Malaysia, Papua New Gui-
opinions; however, most of the studies argue that international nea, Vietnam, and Hong Kong, are excluded due to missing data
trade extension stimulates environmental degradation and the values. We used three environmental sustainability indexes, CO2
existence of the EKC framework within this crucial relationship. emissions, ecological footprint, and carbon footprint, created the
Government expenditures strongly influence the environment. PCA index, and estimated that index as a dependent variable proxy
Optimal balance in government expenditure in mitigating environ- for ecological sustainability to check the aggregative antecedents
mental threats has always remained a problematic issue; however, to environmental sustainability. We collect data for ecological
the current literature has little interest in discussing their interac- and carbon footprint consumption per capita from the Global Foot-
tion and established conclusions, facts, and diverse opinions. Fan print Network (GFN).
et al. (2020) studied government expenditure as a driving factor CO2 emissions in kt stem from the consumption of liquid, solid,
of environmental degradation inequalities in China from 2007 to gas flaring, and gas fuels. Low-carbon electricity is produced from
2015. They revealed that disparities in government expenditure renewable energy sources, including geothermal, tide, solar, bio-
played an essential role in economic and ecological imbalances. mass, wind, biofuels, and hydroelectric. Consistent with previous
Pan et al. (2020) investigated the effect of local government expen- studies (Ezeani et al., 2022a,b; Kwabi et al., 2022; Ezeani et al.,
diture on protecting China’s environment from 2007 to 2016. They 2023), we measured economic growth is measured as GDP per cap-
revealed that fiscal decentralization is central to economic growth ita, constant 2010 US$. International trade is the GDP percentage,
and environmental degradation. Chen et al. (2019) studied totalling imports and exports of goods and services. General
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government final consumption expenditures are measured as a le NT;r

r ¼ max1rrmax ¼ max1rrmax ERðrÞ ð4Þ
percentage of GDP. World Development Indicators (WDI) data for le NT;rþ1
CO2 emissions, low-carbon electricity, economic growth, interna-
tional trade, and government expenditures are transformed into  
logarithmic form before statistical estimations. log 1 þ l
b NT;r
r ¼ max1rrmax   ¼ max1rrmax GRðrÞ ð5Þ
Growing energy demand will drive future environmental sus- log 1 þ l
b NT;rþ1
tainability globally, and efficient renewable energy sources are
prerequisites for achieving climate objectives while considering
low-carbon technologies (Zakari et al., 2022b; C. Zhang et al., 3.3. Panel co-integration and unit root tests
2022). The energy sector can measure and play a catalytic role in
an economy-wide climate-resilient, low-carbon, and sustainable Khan and Hou (2021) claimed that the traditional unit-root
future. Government expenditure is directly linked with higher pol- tests like Levin et al. (2002), Hadri (2000), and Im et al. (2003),
lution resulting from redistributive transfers and increased etc. could not incorporate the cross-section dependence problems,
income, and this association is not exaggerated by the govern- for that they used the recommended second-generation unit-root
ment’s quality and size (Kwabi et al., 2022; Kwabi et al., 2023; tests. Pesaran (2007) proposes the cross-sectionally enhanced IPS
Halkos and Paizanos, 2013). (CIPS), while Hansen (1995) offers the covariate-augmented
Dickey-Fuller (CADF), which has the specifications to handle
3.1. Modeling cross-sectional dependence. We utilize both of these second-
generation unit root methods in this study. A CIPS panel unit-
We examine the impact of low-carbon electricity production root test has the following structural form:
and trade on environmental sustainability in selected APEC coun- Xn
tries from 1990 to 2019, using government expenditure and eco- DXit ¼ ait þ bi Xit1 þ qi T þ h DXi;tj
j¼1 ij
þ eit ð6Þ
nomic growth as mediating variables. Based on the narrative
The differencing equation D consists of mean Xit variables inter-
delivered by (Liu et al., 2023), we considered the inspiration of
cept a, cross sections i, time t, and errors eit . The cross-section
the explanatory variables by executing the functional relationships
dependence issues of panel data sets are also inconsistently han-
expressed in equation (1), and the log-linear equation form is pre-
dled by traditional co-integration tests such as Pedroni (2000)
sented in equation (2).
and Kao and Chiang (2000). Our method is based on the well-
ENV it ¼ b0 þ b1 EP it þ b2 GDPit þ b3 TRADEit þ b4 EXPit þ eit ð1Þ known second-generation panel co-integration test presented by
professor Westerlund in 2007. In addition to handling stationary
lnENV it ¼ b0 þ b1 lnEP it þ b2 lnGDPit þ b3 lnTRADEit estimates efficiently, Westerlund’s (2007) co-integration method
was praised by Zafar et al. (2019) for Durbin-Hausman (DH), DH-
þ b4 lnEXPit þ eit ð2Þ
board, and DH-bunch comprehensions.
ENV is environmental sustainability retrieved as PCA index for
CO2 emissions, ecological footprint, and carbon footprint in this 3.4. Long-run estimates
connection. EP is electricity production from renewable energy
sources, GDP is economic growth, TRADE is international trade, This study applies Beck and Katz (1995) linear-regressions cor-
and EXP is government expenditure. b0 reflect intercept, b1 to b4 related PCSEs, RE-GLS, and robust least square regressions for long-
are the study coefficients, i reflects selected cross-sections run estimates. The correlated PSCEs are the advanced version of
(1–15), t reflect time which is 1990–2019, and eit shows an over- Park’s (1967) feasible generalized least squares (FGLS), which
time error. encounters the overlapping cross-sections independent undistin-
guished disturbance, contemporaneously corrected across-
3.2. Cross-section dependence tests and principal components sections, and allowed heteroskedastic propositions. The benefit of
using RE-GLS is that it possesses effects specification in cross-
Khan et al. (2021) identified that panel data prevails across sections or period dimensions. It automatically adds a constant
cross-section dependence because countries are interlinked world- to the specification’s ordinary coefficient propositions to ensure
wide, and the world has become a global village. They explained that the sum of the effects is zero (Manuel Arellano and Olympia
that the estimated results might provide misleading and spurious Bover, 1995). The indifference of predictable regression approaches
results in cross-section dependence in the panel data sets. The to these outliers may result in inefficient coefficient estimates,
Lagrange Multiplier (LM) test is the primary cross-section depen- which may not accurately reflect the underlying statistical rela-
dence diagnostic used by Breusch and Pagan (1980). Pesaran tionships (Yohai, 1991).
(2004) also proposed a cross-section dependence test to handle
the extensive cross-section settings. Pesaran (2004) proposed a 4. Results and discussion
similar unconventional statistic based on pairwise correlation
averages. A descriptive analysis, correlation analysis, and principal cross-
sffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffi section component analysis of the cross-sections for environmen-
2 X
N1 X
N
tal sustainability, low-carbon electricity production, economic
CDq ¼ Tij q
b ij ! Nð0; 1Þ; ð3Þ
NðN  1Þ i¼1 j¼iþ1 growth, international trade, and government expenditures of
selected APEC countries are presented in Table 1. The descriptive
Where Tij ! 1 and N ! 1 in any order. CD ¼ 0 for all analysis shows that the obtained panel data has symmetric charac-
Tij > k þ i and N. teristics because of no outlier or dissident values comprising the
Principal components of cross-sections were used to design a study sample’s variability. The standard deviation estimates are
linear combination of the variables, random variables were not much diverged from the means; that reflects that considered
unstacked, and associations were determined across cross- panel data has the property of normal distribution and retains
sections by using values, differences, proportions, cumulative val- the variations. Correlation coefficient estimates reported that
ues, and cumulative proportions. low-carbon electricity production and international trade are neg-
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Table 1
Descriptive Analysis, Correlations, and Cross-section Principal Components.

Variables ENV EP GDP TRADE EXP

MEAN 1.710016 0.130008 4.064786 1.761178 1.126153
STD.DEV 1.406914 0.906436 0.517062 0.282406 0.127882
MIN 2.502073 3.054057 2.862896 1.204497 0.755379
MAX 2.161458 1.409428 4.746079 2.640806 1.389647
ENV 1.0000
EP 0.0034 1.0000
GDP 0.9585 0.1072 1.0000
TRADE 0.0158 0.0218 0.0201 1.0000
EXP 0.5812 0.1278 0.7553 1.3896 1.0000
Cross-Sections Values Differences Proportions Cumulative Values Cumulative Proportions
Australia 8.273311 5.337764 0.5516 8.273311 0.5516
Canada 2.935547 1.445627 0.1957 11.20886 0.7473
Chile 1.489920 0.724678 0.0993 12.69878 0.8466
China 0.765242 0.251230 0.0510 13.46402 0.8976
Indonesia 0.514011 0.086366 0.0343 13.97803 0.9319
Japan 0.427646 0.254812 0.0285 14.40568 0.9604
Korea, Rep. 0.172834 0.051590 0.0115 14.57851 0.9719
Mexico 0.121244 0.008453 0.0081 14.69975 0.9800
New Zealand 0.112791 0.037989 0.0075 14.81254 0.9875
Peru 0.074802 0.018820 0.0050 14.88735 0.9925
Philippines 0.055982 0.022652 0.0037 14.94333 0.9962
Russian Federation 0.033330 0.020556 0.0022 14.97666 0.9984
Singapore 0.012775 0.005313 0.0009 14.98943 0.9993
Thailand 0.007462 0.004358 0.0005 14.99690 0.9998
United States 0.003104 – 0.0002 15.00000 1.0000

atively associated, while economic growth and government expen- the environmental sustainability of low-carbon electricity produc-
diture are positively related to environmental sustainability. Cross- tion improves, while economic growth, international trade, and
section principal components correspond to each cross-section’s government expenditures worsen it.
proportions, differences, values, cumulative proportions, and val- The relationship between low-carbon electricity production and
ues. The result demonstrates ranging from 0.5516 to 1.0000 per- environmental sustainability is negative at a 1% significant level. A
cent, cumulative proportions remained un-stacked in multiple 1 percent increase in low-carbon electricity production stimulates
random variables for several cross-sections. The intricate empirical environmental sustainability by 0.145921 percent (PCSE),
exploration and sound functional associations among these vari- 0.0971772 percent (RE-GLS), and 0.171892 percent (robust least
ables have comprehensively investigated the thorough empirical squares) in the selected APEC countries. This result signifies that
estimations. Fig. 4 shows the descriptive analysis and data trending decreasing environmental impacts is a powerful impetus for an
in multiple line graphs in Fig. 5. energy transition from non-renewable fossil fuels to low-carbon
The results of the cross-sectional dependence analysis are pre- renewable electricity production resources
sented in Table 2. The results imply that environmental sustain- (TheNationalAcademiesPress, 2010). Furthermore, this result
ability, low-carbon electricity production, economic growth, underscores that low-carbon energy production is usually a top
international trade, and government expenditure are 1% signifi- priority on the world’s list of changes to prevent the worst effects
cant. This outcome illustrates that the considered variables own of global warming since renewable energy sources do not emit
cross-section dependence in selected APEC countries over the harmful greenhouse gases that contribute to global warming
study time. In front of cross-section dependence, traditional econo- (Nunez, 2020).
metric approaches produce impulsive findings. To avoid such mis- The relationship between economic growth and environmental
leading approximations, we present the results of panel unit root sustainability is positive at a 1% significant level. A 1 percent accel-
panel Pesaran CIPS and panel Pesaran CADF approaches in Table 3. eration in economic growth may deteriorate environmental sus-
Both methods show that environmental sustainability and low- tainability (increases CO2 emissions, ecological footprint, and
carbon electricity production are leveled non-stationary while dif- carbon footprint) by 2.515973 percent (PCSE), 2.623775 percent
ferenced stationary at 1% significant. However, economic growth, (RE-GLS), and 2.526262 percent (robust least squares) in the
international trade, and government expenditure are stationary selected APEC countries. This result implies that accelerated eco-
at the level and the first difference and 10% and 1% significant. nomic growth increases real GDP (real output), and increased con-
Likewise, the result of the panel co-integration test of sumption and production primarily stimulate costs imposed on the
Westerlund (2007) is discussed in Table 4. The results explain that environment. Moreover, higher economic growth’s environmental
Gt and Pt are 5% significant, Pa 1% significant, and Ga insignificant. impact involves higher consumption of fossil fuels, global warm-
Overall, these results show that three are substantial out of four, ing, a higher level of pollution, and tremendous environmental sus-
reflecting environmental sustainability, low-carbon electricity pro- tainability loss (Tawiah et al., 2021).
duction, economic growth, international trade, and government The association between international trade and environmental
expenditure have long-run relationships. sustainability is positive at a 5 percent significant level. A 1 percent
Table 5 discusses the outcome of long-run analysis presenting rise in global trade liberalization deteriorates environmental sus-
linear regression, correlated PCSE regressions, RE-GLS regression, tainability (increases CO2 emissions, ecological footprint, and car-
and robust least-squares approaches. All methods show that low- bon footprint) by 0.1486634 percent (PCSE), 0.2468802 percent
carbon electricity production negatively correlates with environ- (RE-GLS), and 0.295816 percent (robust least squares), in the
mental sustainability, whereas economic growth, international selected APEC countries. This finding implies that increased inter-
trade, and government spending correlate positively. In addition, national trade liberalization deteriorates the environment through

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Fig. 4. Density cross-sections.

Fig. 5. Line multiple graphs.

production, distribution, consumption, and its influence on eco- At a significance level of 1 percent, government expenditures
nomic growth. Moreover, these findings indicate that global trade’s are positively correlated with environmental sustainability. A 1
direct relationship with national income and forthcoming percent acceleration in the government expenditure may degrade
expended production may worsen environmental sustainability the environmental sustainability (increases CO2 emissions, ecolog-
(Williams, 1993). ical footprint, and carbon footprint) by 0.9115604 percent (PCSE),

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Table 2
Cross-Section Dependence Analysis.

Methods ENV EP GDP TRADE EXP

Breusch Pagan LM Test 882.6977*** 1336.246*** 2411.189*** 839.6409*** 611.1710***
(0.000) (0.000) (0.000) (0.000) (0.000)
Pesaran scaled LM Test 53.66624*** 84.96402*** 159.1422*** 50.69504*** 34.92912***
(0.000) (0.000) (0.000) (0.000) (0.000)
Bias corrected LM Test 53.37778*** 84.67556*** 158.8537*** 50.40658*** 34.64065***
(0.000) (0.000) (0.000) (0.000) (0.000)
Pesaran CD Test 14.22227*** 20.74385*** 48.87984*** 18.69593*** 8.979129***
(0.000) (0.000) (0.000) (0.000) (0.000)

***=1% significance.

Table 3
Panel Unit Root Analysis.

Variables/Methods Panel Pesaran CIPS Panel Pesaran CADF

Level Differenced Level Differenced
ENV 2.030 4.942*** 1.716 3.095***
EP 1.489 5.388*** 1.489 2.730***
GDP 2.266* 3.420*** 2.263* 2.850***
TRADE 2.066* 4.266*** 2.331* 3.566***
EXP 1.608* 3.747*** 2.337* 2.975***

***=1% significance, *=10% significance.

Table 4 growth, international trade, and government expenditure. Out-

Panel Westerlund Co-integration Analysis. come explores that one-directional Granger causality runs from
Statistics Value Z-value p-value low-carbon electricity production to ecological sustainability, eco-
Gt 3.057** 2.482 0.007 nomic development to environmental sustainability, and govern-
Ga 11.454 0.713 0.762 ment expenditure to environmental sustainability. Moreover,
Pt 13.177** 4.483 0.000 one-directional Granger causality also runs from low-carbon elec-
Pa 13.866* 2.329 0.010 tricity production to economic growth, economic growth to inter-
**=5% significance, *=10% significance. national trade, and international business to government
expenditure. However, two-directional Granger causality exists
between government expenditure and international trade at a 1%
0.4611544 percent (RE-GLS), and 1.026582 percent (robust least significant level in the selected APEC countries from 1990 to
squares) in the selected APEC countries during the study period. 2019. A pie chart is shown in Fig. 6, while a triangular diagram
These findings identify that higher governmental expenditure cre- indicates the interrelationships among the variables in Fig. 7.
ates pressure on economic growth to incorporate capital-intensive
human undertakings instead of capital-intensive physical indus- 5. Conclusion and policy propositions
tries that compromise environmental sustainability. This result
also indicates that the rise in government expenditures may affect Sustainability looks into protecting the human, ecological, and
distributional transfers, resulting in income equality and an natural environment while driving innovation without compro-
increase in ecological sustainability demands (Halkos and mising the present and future generations’ lifestyles and needs.
Paizanos, 2013). This study examined the impact of low-carbon electricity produc-
To appraise the causality associations among the variables, we tion and trade on environmental sustainability in selected APEC
incorporate the estimations of panel Granger causality analysis. countries from 1990 to 2019, using government expenditure and
Table 6 presents the Granger relationship results of environmental economic growth as mediating variables. We used three environ-
sustainability, low-carbon electricity production, economic mental sustainability indexes, CO2 emissions, carbon footprint,

Table 5
Long-run Analysis.

Methods Linear regression, correlated PCSE regression Random effect GLS regression Robust least squares (Robustness)
Variables Coefficients Std. Errors z-Statistic Coefficients Std. Errors z-Statistics Coefficients Std. Errors z-Statistics
EP 0.145921*** 0.0165044 8.84 0.0971772** 0.0281792 3.45 0.171892*** 0.017600 9.76
(0.000) (0.001) (0.000)
GDP 2.515973*** 0.0290057 86.74 2.623775*** 0.1249794 20.99 2.526262*** 0.036934 68.40
(0.000) (0.000) (0.000)
TRADE 0.1486634** 0.0537076 2.77 0.2468802* 0.1140564 2.16 0.295816*** 0.058613 5.04
(0.006) (0.030) (0.000)
EXP 0.9115604*** 0.1705809 5.34 0.4611544* 0.248125 1.86 1.026582*** 0.156596 6.55
(0.000) (0.063) (0.000)
Cons 11.4963*** 0.1793057 64.12 10.58468*** 0.5607547 18.88 11.89541*** 0.202653 58.69
(0.000) (0.000)

***=1% significance, **=5% significance, *=10% significance.

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S. Zhang, D. Kong, Bilal et al. Gondwana Research 127 (2024) 65–76

Table 6
Granger Causality Analysis.

Variables ENV EP GDP TRADE EXP

ENV – 1.05404 1.45192 0.27149 1.81723
(0.3793) (0.216) (0.896) (0.125)
EP 2.43955* – 6.02495*** 1.22345 0.83864
(0.046) (0.000) (0.300) (0.501)
GDP 6.43167*** 1.58287 – 2.37203* 1.67238
(0.000) (0.178) (0.052) (0.156)
TRADE 0.22932 0.06371 0.28862 – 2.16427*
(0.921) (0.992) (0.885) (0.072)
EXP 2.81002* 0.30916 1.42252 2.02474* –
(0.025) (0.871) (0.226) (0.090)

***=1% significance, *=10% significance.

Fig. 6. Pie combined cross-sections.

and ecological footprint, created the PCA index and estimated that development, and the price of energy generated from renewable
index using environmental sustainability as a dependent variable sources, which ascertains pricing policies and establishes thresh-
to check the aggregative antecedents to environmental sustainabil- olds for renewable energy. Besides hydropower, renewable energy
ity. Data for ecological footprint and carbon footprint consumption technology is more costly than non-renewable fossil fuels because
per capita are arranged from GFN. However, data for CO2 emis- of longer-term subsidies for fossil fuel non-renewables. Therefore,
sions, low-carbon electricity, economic growth, international policymakers are proposed to consider pricing policy to provide
trade, and government expenditure have been collected from the inducements for the broader dissemination of renewables. Feed-
WDI. Overall, the results signify that low-carbon electricity pro- in tariffs or input prices strengthen energy distribution to procure
duction is negatively associated, while economic growth, interna- renewable energy at a flat rate and link it to the grid. Moreover,
tional trade, and government expenditure are positively related APEC countries’ governments are suggested to produce tendering
to environmental sustainability. Moreover, low-carbon electricity based on governmental-run bidding agreements that supply
production improves, while economic development, international renewable energy and increase clean energy share.
trade, and government expenditure worsen environmental This study suggests and supports the well-known argument
sustainability. that economic growth and the environment should go hand in
The long-run estimations suggest that low-carbon electricity hand. Policymakers in the APEC countries are recommended to
production improves environmental sustainability. Based on the advocate green growth policies, merge environmental concerns
findings, this study proposes the selected APEC countries to broad into the economic choices by considering transforming the energy
low-carbon energy policies to accelerate renewable energy tech- system and resource efficiency, value scarce natural resources in
nology advancement and industry system evolution, primarily the economic growth reckoning, and price the environmental
encouraging the breakthrough technological innovations and externalities. This study suggests that the government and envi-
industrialization of wind power, solar power, and bio-liquid fuels. ronmental institutions consider sustainable economic growth by
The APEC countries are encouraged to establish policy targets, pro- raising employment, income, and investment levels in Sustainable
visional arrangements for managing renewable energy funds, med- economic growth through green technology and infrastructure. For
ium and long-term plans for renewable energy policy and APEC countries’ economies to develop without intensifying

73
S. Zhang, D. Kong, Bilal et al. Gondwana Research 127 (2024) 65–76

Fig. 7. Kernel Density lowers triangular.

environmental harm and consuming more resources, environmen- References

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