Does ICT trade facilitate renewable energy transition and environmental sustainability? Evidence from Bangladesh, India, Pakistan, Sri Lanka, Nepal and Maldives

Abstract

Consumption of fossil fuels has triggered the worldwide awareness to attain socioeconomic and environmental sustainability, particularly by enhancing renewable energy use and mitigating the environmental adversities, in tandem. Against this background, this paper aimed to investigate the impacts of promoting ICT trade, through liberalization of the associated trade barriers, on the prospects of undergoing renewable energy transition and limiting environmental degradation by curbing CO₂ emissions across six South Asian economies. The overall results from the econometric analyses, in a nutshell, confirm that higher degrees of openness to ICT trade lead to greater consumption of renewable energy, improve energy use efficiency levels and enhance access to cleaner cooking fuels. However, ICT trade fails to elevate the renewable energy shares in aggregate final energy consumption figures in South Asia. Besides, ICT trade is also seen to boost CO₂ emissions across this region; although the impacts seem to reverse upon enhancement in renewable energy consumption levels along with liberalization of the ICT trade barriers. Thus, these results impose key policy implications for the South Asian governments for simultaneously ensuring energy security and sustaining environmental well-being across South Asia.

Keywords

ICT / Renewable energy transition / Carbon emissions / Cross-sectional dependence / South Asia

References

[1] Abid MR, Lghoul R, Benhaddou D (2017) ICT for renewable energy integration into smart buildings: IoT and big data approach. In: 2017 IEEE AFRICON. IEEE, pp 856–861

[2] Acharya V, Hegde VV, Anjan K, Kumar M (2017). IoT (Internet of Things) based efficiency monitoring system for bio-gas plants. In: 2017 2nd international conference on computational systems and information technology for sustainable solution (CSITSS). IEEE, pp 1–5

[3] Agrawala S, Raksakulthai V, van Aalst M, Larsen P, Smith J, Reynolds J. Development and climate change in Nepal: Focus on water resources and hydropower, 2003 Paris Oecd 14-28

[4] Ahmed F, Naeem M, Iqbal M. ICT and renewable energy: a way forward to the next generation telecom base stations. Telecommun Syst, 2017, 64(1): 43-56

[5] Alam MM, Murad MW. The impacts of economic growth, trade openness and technological progress on renewable energy use in organization for economic co-operation and development countries. Renew Energy, 2020, 145: 382-390

[6] Alstone P, Gershenson D, Kammen DM. Decentralized energy systems for clean electricity access. Nat Clim Change, 2015, 5(4): 305-314

[7] Amri F. Renewable and non-renewable energy and trade into developed and developing countries. Qual Quant, 2019, 53(1): 377-387

[8] Amri F, Zaied YB, Lahouel BB. ICT, total factor productivity, and carbon dioxide emissions in Tunisia. Technol Forecast Soc Chang, 2019, 146: 212-217

[9] Andreopoulou Z. Green Informatics: ICT for green and Sustainability. Agrárinformatika J Agric Inf, 2012, 3(2): 1-8

[10] Arnone D, Bertoncini M, Rossi A, D’Errico F, García-Santiago C, Moneta D, D’Orinzi C (2013) An ICT-based energy management system to integrate renewable energy and storage for grid balancing. In: Proceedings of the fourth international conference on future energy systems. ACM, pp 259–260

[11] Asif M, Muneer T. Energy supply, its demand and security issues for developed and emerging economies. Renew Sustain Energy Rev, 2007, 11(7): 1388-1413

[12] Bai J, Kao C, Ng S. Panel cointegration with global stochastic trends. J Econom, 2009, 149(1): 82-99

[13] Bastida L, Cohen JJ, Kollmann A, Moya A, Reichl J. Exploring the role of ICT on household behavioral energy efficiency to mitigate global warming. Renew Sustain Energy Rev, 2019, 103: 455-462

[14] Baurzhan S, Jenkins GP. Off-grid solar PV: is it an affordable or appropriate solution for rural electrification in Sub-Saharan African countries?. Renew Sustain Energy Rev, 2016, 60: 1405-1418

[15] Bhattacharyya SC, Palit D. Mini-grid based off-grid electrification to enhance electricity access in developing countries: what policies may be required?. Energy Policy, 2016, 94: 166-178

[16] Boden TA, Marland G, Andres RJ (2009) Global, regional, and national fossil-fuel CO₂ emissions. Carbon Dioxide Information Analysis Center, Oak Ridge National Laboratory, US Department of Energy, Oak Ridge, Tenn., USA

[17] Bourhnane S, Abid MR, Lghoul R, Zine-Dine K, Elkamoun N, Bakhouya M, Benhaddou D (2019). Real-time control of smart grids using NI CompactRIO. In: 2019 international conference on wireless technologies, embedded and intelligent systems (WITS). IEEE, pp 1–6

[18] Breitung J. Baltagi BH. The local power of some unit root tests for panel data. Advances in econometrics, volume 15: nonstationary panels, panel cointegration, and dynamic panels, 2000 Amsterdam JAI Press 161-178

[19] Breusch TS, Pagan AR. The Lagrange multiplier test and its applications to model specification in econometrics. Rev Econ Stud, 1980, 47(1): 239-253

[20] Chapman D, Tyrrell T, Mount T. Electricity demand growth and the energy crisis. Science, 1972, 178(4062): 703-708

[21] Chavan S, Chavan M (2020) Recent trends in ICT-enabled renewable energy systems. In: Information and communication technology for sustainable development. Springer, Singapore, pp 327–332

[22] Cole MA. Trade, the pollution haven hypothesis and the environmental Kuznets curve: examining the linkages. Ecol Econ, 2004, 48(1): 71-81

[23] Despins C, Labeau F, Le Ngoc T, Labelle R, Cheriet M, Thibeault C, Mcneill J. Leveraging green communications for carbon emission reductions: techniques, testbeds, and emerging carbon footprint standards. IEEE Commun Mag, 2011, 49(8): 101-109

[24] Dong K, Dong X, Jiang Q. How renewable energy consumption lower global CO₂ emissions? Evidence from countries with different income levels. World Econ, 2020, 43(6): 1665-1698

[25] Doukas H, Marinakis V, Tsapelas J, Sgouridis S (2019) Intelligent energy management within the smart cities: an EU-GCC cooperation opportunity. In: Smart cities in the Gulf. Palgrave Macmillan, Singapore, pp 123–147

[26] Droege P. Urban energy transition: from fossil fuels to renewable power, 2011 Amsterdam Elsevier

[27] Dumitrescu EI, Hurlin C. Testing for Granger non-causality in heterogeneous panels. Econ Model, 2012, 29(4): 1450-1460

[28] El-Baz W, Tzscheutschler P, Wagner U. Integration of energy markets in microgrids: a double-sided auction with device-oriented bidding strategies. Appl Energy, 2019, 241: 625-639

[29] Erlinghagen S, Markard J. Smart grids and the transformation of the electricity sector: ICT firms as potential catalysts for sectoral change. Energy Policy, 2012, 51: 895-906

[30] Espe E, Potdar V, Chang E. Prosumer communities and relationships in smart grids: a literature review, evolution and future directions. Energies, 2018, 11(10): 2528

[31] Evans W, Johnson M, Jagoe K, Charron D, Young B, Rahman ASMM, Ipe J. Evaluation of behavior change communication campaigns to promote modern cookstove purchase and use in lower-middle-income countries. Int J Environ Res Public Health, 2017, 15(1): 11

[32] Ferdaus J, Appiah BK, Majumder SC, Martial AAA. A panel dynamic analysis on energy consumption, energy prices and economic growth in Next-11 countries. Int J Energy Econ Policy, 2020

[33] Field CB. Climate change 2014–impacts, adaptation and vulnerability: regional aspects, 2014 Cambridge Cambridge University Press

[34] Frees EW. Assessing cross-sectional correlation in panel data. J Econom, 1995, 69: 393-414

[35] Friedman M. The use of ranks to avoid the assumption of normality implicit in the analysis of variance. J Am Stat Assoc, 1937, 32: 675-701

[36] Fung CC, Tang SC, Wong KP (2010). A proposed study on the use of ICT and smart meters to influence consumers’ behavior and attitude towards Renewable Energy. In: IEEE PES general meeting. IEEE, pp 1–5

[37] Gautier A, Jacqmin J, Poudou JC. The prosumers and the grid. J Regul Econ, 2018, 53(1): 100-126

[38] Geweke J. Measurement of linear dependence and feedback between multiple time series. J Am Stat Assoc, 1982, 77: 304-313

[39] Goebel C, Callaway DS. Using ICT-controlled plug-in electric vehicles to supply grid regulation in California at different renewable integration levels. IEEE Trans Smart Grid, 2012, 4(2): 729-740

[40] Granger CWJ. Investigating causal relations by econometric models and cross-spectral methods. Econometrica, 1969, 37: 424-438

[41] Harris RD, Tzavalis E. Inference for unit roots in dynamic panels where the time dimension is fixed. J Econom, 1999, 91(2): 201-226

[42] Haseeb A, Xia E, Saud S, Ahmad A, Khurshid H. Does information and communication technologies improve environmental quality in the era of globalization? An empirical analysis. Environ Sci Pollut Res, 2019, 26(9): 8594-8608

[43] He J, Wang Y, Chen W (2020) Energy transition driven by the energy internet. In: Annual report on China’s response to climate change (2017). Springer, Singapore, pp 77–89

[44] Higón DA, Gholami R, Shirazi F. ICT and environmental sustainability: a global perspective. Telemat Inform, 2017, 34(4): 85-95

[45] Hoel M, Kverndokk S. Depletion of fossil fuels and the impacts of global warming. Resour Energy Econ, 1996, 18(2): 115-136

[46] Inglesi-Lotz R, Dogan E. The role of renewable versus non-renewable energy to the level of CO₂ emissions a panel analysis of sub-Saharan Africa’s Βig 10 electricity generators. Renew Energy, 2018, 123: 36-43

[47] IPCC (2014) Climate change 2014: synthesis report. In: Contribution of working groups I, II and III to the fifth assessment report of the intergovernmental panel on climate change. IPCC, Geneva, Switzerland. https://www.ipcc.ch/site/assets/uploads/2018/02/SYR_AR5_FINAL_full.pdf

[48] Jindal A, Schaeffer-Filho A, Marnerides AK, Smith P, Mauthe A, Granville L (2020). Tackling energy theft in smart grids through data-driven analysis. In: 2020 international conference on computing, networking and communications (ICNC). IEEE, pp 410–414

[49] Kao C. Spurious regression and residual-based tests for cointegration in panel data. J Econ, 1999, 90: 1-44

[50] Kasayanond A, Umam R, Jermsittiparsert K. Environmental sustainability and its growth in Malaysia by elaborating the green economy and environmental efficiency. Int J Energy Econ Policy, 2019, 9(5): 465

[51] Khan N, Baloch MA, Saud S, Fatima T. The effect of ICT on CO 2 emissions in emerging economies: does the level of income matters?. Environ Sci Pollut Res, 2018, 25(23): 22850-22860

[52] Kramers A, Höjer M, Lövehagen N, Wangel J. Smart sustainable cities–Exploring ICT solutions for reduced energy use in cities. Environ Model Softw, 2014, 56: 52-62

[53] Lee JW, Brahmasrene T. ICT, CO₂ emissions and economic growth: evidence from a panel of ASEAN. Glob Econ Rev, 2014, 43(2): 93-109

[54] Lin B, Omoju OE, Okonkwo JU. Factors influencing renewable electricity consumption in China. Renew Sustain Energy Rev, 2016, 55: 687-696

[55] Long X, Naminse EY, Du J, Zhuang J. Nonrenewable energy, renewable energy, carbon dioxide emissions and economic growth in China from 1952 to 2012. Renew Sustain Energy Rev, 2015, 52: 680-688

[56] Long X, Zhao X, Cheng F. The comparison analysis of total factor productivity and eco-efficiency in China’s cement manufactures. Energy Policy, 2015, 81: 61-66

[57] Luderer G, Bosetti V, Jakob M, Leimbach M, Steckel JC, Waisman H, Edenhofer O. The economics of decarbonizing the energy system—results and insights from the RECIPE model intercomparison. Clim Change, 2012, 114(1): 9-37

[58] Mekonnen Y, Sarwat AI (2017) Renewable energy supported microgrid in rural electrification of Sub-Saharan Africa. In: 2017 IEEE PES power Africa. IEEE, pp 595–599

[59] Mensah CN, Long X, Dauda L, Boamah KB, Salman M, Appiah-Twum F, Tachie AK. Technological innovation and green growth in the Organization for Economic Cooperation and Development economies. J Clean Prod, 2019, 240: 118204

[60] Mirza UK, Ahmad N, Harijan K, Majeed T. Identifying and addressing barriers to renewable energy development in Pakistan. Renew Sustain Energy Rev, 2009, 13(4): 927-931

[61] Molla T, Khan B, Moges B, Alhelou HH, Zamani R, Siano P. Integrated optimization of smart home appliances with cost-effective energy management system. CSEE J Power Energy Syst, 2019, 5(2): 249-258

[62] Muhammad S, Long X, Salman M, Dauda L. Effect of urbanization and international trade on CO₂ emissions across 65 belt and road initiative countries. Energy, 2020, 196: 117102

[63] Murshed M. Does improvement in trade openness facilitate renewable energy transition? Evidence from selected South Asian economies. South Asia Econ J, 2018, 19(2): 151-170

[64] Murshed M. A review of the prospects and benefits of smart gridding technology adoption in Bangladesh’s power sector. Nat Gas Electr, 2019, 36(3): 19-28

[65] Murshed M. An empirical investigation of foreign financial assistance inflows and its fungibility analyses: evidence from Bangladesh. Economies, 2019, 7(3): 95

[66] Murshed M. Electricity conservation opportunities within private university campuses in Bangladesh. Energy Environ, 2020, 31(2): 256-274

[67] Murshed M. Are trade liberalization policies aligned with renewable energy transition in low and middle income countries? An instrumental variable approach. Renew Energy, 2020, 151: 1110-1123

[68] Murshed M. Revisiting the deforestation-induced EKC hypothesis: the role of Democracy in Bangladesh. GeoJournal, 2020

[69] Murshed M. An empirical analysis of the non-linear impacts of ICT-trade openness on renewable energy transition, energy efficiency, clean cooking fuel access and environmental sustainability in South Asia. Environ Sci Pollut Res, 2020

[70] Murshed M. LPG consumption and environmental Kuznets Curve hypothesis in South Asia: a time-series ARDL analysis with multiple structural breaks. Environ Sci Pollut Res, 2020

[71] Murshed M, Dao NTT. Revisiting the CO₂ emission-induced EKC hypothesis in South Asia: the role of export quality improvement. GeoJournal, 2020

[72] Murshed M, Tanha MM. Oil price shocks and renewable energy transition: Empirical evidence from net oil-importing South Asian economies. Energy Ecol Environ, 2020

[73] Murshed M, Abbass K, Rashid S. Modeling renewable energy adoption across south Asian economies: empirical evidence from Bangladesh, India, Pakistan and Sri Lanka. Int J Finance Econ, 2020

[74] Murshed M, Ali SR, Banerjee S. Consumption of liquefied petroleum gas and the EKC hypothesis in South Asia: evidence from cross-sectionally dependent heterogeneous panel data with structural breaks. Energy Ecol Environ, 2020

[75] Murshed M, Nurmakhanova M, Elheddad M, Ahmed R. Value addition in the services sector and its heterogeneous impacts on CO 2 emissions: revisiting the EKC hypothesis for the OPEC using panel spatial estimation techniques. Environ Sci Pollut Res, 2020

[76] Murshed M, Ferdaus J, Rashid S, Tanha MM, Islam J. The environmental Kuznets Curve hypothesis for deforestation in Bangladesh: an ARDL analysis with multiple structural breaks. Energy Ecol Environ, 2020

[77] Nurulin YR, Skvortsova IV, Kalchenko OA (2019) Energy planning and energy efficiency in smart city areas. In: SHS web of conferences, vol 61. EDP Sciences, p 01017

[78] Omer AM. Energy, environment and sustainable development. Renew Sustain Energy Rev, 2008, 12(9): 2265-2300

[79] Ożadowicz A. A new concept of active demand side management for energy efficient prosumer microgrids with smart building technologies. Energies, 2017, 10(11): 1771

[80] Palit D, Bandyopadhyay KR. Rural electricity access in South Asia: is grid extension the remedy? A critical review. Renew Sustain Energy Rev, 2016, 60: 1505-1515

[81] Panajotovic B, Jankovic M, Odadzic B (2011) ICT and smart grid. In: Proceedings for the 10th international conference on telecommunication in modern satellite cable and broadcasting services, pp 118–121

[82] Park Y, Meng F, Baloch MA. The effect of ICT, financial development, growth, and trade openness on CO₂ emissions: an empirical analysis. Environ Sci Pollut Res, 2018, 25(30): 30708-30719

[83] Pata UK. Renewable energy consumption, urbanization, financial development, income and CO₂ emissions in Turkey: testing EKC hypothesis with structural breaks. J Clean Prod, 2018, 187: 770-779

[84] Pesaran MH (2004) General diagnostic tests for cross section dependence in panels. Cambridge working paper in economics no. 0435

[85] Pesaran MH. A simple panel unit root test in the presence of cross-section dependence. J Appl Econom, 2007, 22(2): 265-312

[86] Petroleum British. Statistical review of world energy, 2018 London British Petroleum

[87] Rajbongshi R, Borgohain D, Mahapatra S. Optimization of PV-biomass-diesel and grid base hybrid energy systems for rural electrification by using HOMER. Energy, 2017, 126: 461-474

[88] Roche OM, Blanchard RE. Design of a solar energy centre for providing lighting and income-generating activities for off-grid rural communities in Kenya. Renew Energy, 2018, 118: 685-694

[89] Rockström J, Gaffney O, Rogelj J, Meinshausen M, Nakicenovic N, Schellnhuber HJ. A roadmap for rapid decarbonization. Science, 2017, 355(6331): 1269-1271

[90] Rodríguez Casal C, Van Wunnik C, Delgado Sancho L, Claude Burgelman J, Desruelle P. How will ICTs affect our environment in 2020?. Foresight, 2005, 7(1): 77-87

[91] Saboori B, Sulaiman J. Environmental degradation, economic growth and energy consumption: evidence of the environmental Kuznets curve in Malaysia. Energy Policy, 2013, 60: 892-905

[92] Salman M, Long X, Dauda L, Mensah CN. The impact of institutional quality on economic growth and carbon emissions: evidence from Indonesia, South Korea and Thailand. J Clean Prod, 2019, 241: 118331

[93] Sharif A, Raza SA, Ozturk I, Afshan S. The dynamic relationship of renewable and nonrenewable energy consumption with carbon emission: a global study with the application of heterogeneous panel estimations. Renewable Energy, 2019, 133: 685-691

[94] Shawon MH, Muyeen SM, Ghosh A, Islam SM, Baptista MS. Multi-agent systems in ICT enabled smart grid: a status update on technology framework and applications. IEEE Access, 2019, 7: 97959-97973

[95] Skea J, Van Diemen R, Hannon M, Gazis E, Rhodes A. Energy innovation for the twenty-first century, 2019 Cheltenham Edward Elgar Publishing

[96] Smil V, Knowland WE (1980) Energy in the developing world: the real energy crisis

[97] Smith LV, Leybourne S, Kim T-H, Newbold P. More powerful panel data unit root tests with an application to mean reversion in real exchange rates. J Appl Econ, 2004, 19: 147-170

[98] Sousa T, Soares T, Pinson P, Moret F, Baroche T, Sorin E. Peer-to-peer and community-based markets: a comprehensive review. Renew Sustain Energy Rev, 2019, 104: 367-378

[99] Stallo C, De Sanctis M, Ruggieri M, Bisio I, Marchese M (2010) ICT applications in green and renewable energy sector. In: 2010 19th IEEE international workshops on enabling technologies: infrastructures for collaborative enterprises. IEEE, pp 175–179

[100] Urmee T, Harries D, Schlapfer A. Issues related to rural electrification using renewable energy in developing countries of Asia and Pacific. Renew Energy, 2009, 34(2): 354-357

[101] Valentine SV. Emerging symbiosis: renewable energy and energy security. Renew Sustain Energy Rev, 2011, 15(9): 4572-4578

[102] van Alphen K, van Sark WG, Hekkert MP. Renewable energy technologies in the Maldives—determining the potential. Renew Sustain Energy Rev, 2007, 11(8): 1650-1674

[103] Vanek J. The factor proportions theory: the n-factor case. Kyklos, 1968, 21(4): 749-756

[104] Vivoda V. Evaluating energy security in the Asia-Pacific region: a novel methodological approach. Energy Policy, 2010, 38(9): 5258-5263

[105] Wang Y, Sanchez Rodrigues V, Evans L. The use of ICT in road freight transport for CO₂ reduction–an exploratory study of UK’s grocery retail industry. Int J Logist Manag, 2015, 26(1): 2-29

[106] Weiller C, Neely A. Using electric vehicles for energy services: industry perspectives. Energy, 2014, 77: 194-200

[107] Westerlund J. Testing for error correction in panel data. Oxford Bull Econ Stat, 2007, 69(6): 709-748

[108] Westerlund J. Panel cointegration tests of the fisher effects. J Appl Econ, 2008, 23: 193-233

[109] Worighi I, Maach A, Hafid A, Hegazy O, Van Mierlo J. Integrating renewable energy in smart grid system: architecture, virtualization and analysis. Sustain Energy Grids Netw, 2019, 18: 100226

[110] World Bank (2020) World development indicators database. The World Bank

[111] World Energy Council (2018) The role of ICT in energy efficiency management: household sector. https://www.worldenergy.org/wp-content/uploads/2018/06/20180420_TF_paper_final.pdf

[112] Xue Y, Cai B, James G, Dong Z, Wen F, Xue F. Primary energy congestion of power systems. J Modern Power Syst Clean Energy, 2014, 2(1): 39-49

[113] Yang M, Yu X. Energy efficiency: benefits for environment and society, 2015 Berlin Springer

[114] Yasmin N, Grundmann P. Adoption and diffusion of renewable energy—the case of biogas as alternative fuel for cooking in Pakistan. Renew Sustain Energy Rev, 2019, 101: 255-264

[115] Zafar R, Mahmood A, Razzaq S, Ali W, Naeem U, Shehzad K. Prosumer based energy management and sharing in smart grid. Renew Sustain Energy Rev, 2018, 82: 1675-1684

[116] Zafar MW, Shahbaz M, Hou F, Sinha A. From nonrenewable to renewable energy and its impact on economic growth: the role of research & development expenditures in Asia-Pacific Economic Cooperation countries. J Clean Prod, 2019, 212: 1166-1178

[117] Zhang C, Wu J, Zhou Y, Cheng M, Long C. Peer-to-Peer energy trading in a Microgrid. Appl Energy, 2018, 220: 1-12

[118] Zhang J, Wang B, Latif Z. Towards cross-regional sustainable development: the nexus between information and communication technology, energy consumption, and CO₂ emissions. Sustain Dev, 2019, 27(5): 990-1000