Macroeconomic determinants on fossil fuel energy consumption in six ASEAN countries
DOI:
https://doi.org/10.12928/optimum.v16i1.15867Keywords:
Economic Growth, Trade Openness, Government Expenditure, Fossil Fuel Energy ConsumptionAbstract
ASEAN countries continue to face challenges in reducing their dependence on fossil fuels despite rapid economic growth and the ongoing global energy transition. This study examines how government expenditure, trade openness, and economic growth influence fossil fuel energy consumption in six ASEAN countries. Understanding the macroeconomic dynamics that drive fossil fuel use is critical for achieving international climate targets under the Paris Agreement, particularly as the region is among the fastest-growing in terms of energy demand and serves as a major global industrial base. Using panel data for the period 2001–2024 and a fixed effects model (FEM), the results show that economic growth has a positive but statistically insignificant effect on fossil fuel consumption, while trade openness and government expenditure have positive and statistically significant effects. These variables jointly explain approximately 98.28% of the variation, indicating that trade integration and fiscal expansion play a more dominant role than economic growth alone. These findings suggest that ASEAN’s reliance on fossil fuels is closely linked to trade dynamics and fiscal policy. Therefore, for regional economic integration to support the transition toward a sustainable energy system, trade and government spending policies must be aligned with energy efficiency and sustainability objectives.
References
ASEAN Centre For Enegy. (2024). ASEAN Energy Investment 2024. ASEAN Centre for Energy. Jakarta.
Balassa, B. (1985). Exports, policy choices, and economic growth in developing countries after the 1973 oil shock. Journal of Development Economics, 18(1), 23-35. https://doi.org/10.1016/0304-3878(85)90004-5
Basuki, A.T. (2021). Analisis Data Panel dalam Penelitian Ekonomi dan Bisnis. PT Rajagrafindo Persada. Yogyakarta.
Bhattacharyya, SC (2011). Energy Economy. Springer London Dordrecht Heidelberg.
Bintariningtyas, S., Mulyaningsih, T., & Purwaningsih, Y. (2024). Coal mining and MSME: Is it mutually beneficial?. Nature Environment & Pollution Technology, 23(2), 855-862. https://doi.org/10.46488/NEPT.2024.v23i02.021
Cahyono, BP., & Hakimah, Y. (2019). The impact of economic development, household expenditure, and trade openness on final energy consumption in Indonesia. Journal of Global Economics, 4(2), 1-16. https://doi.org/10.35908/jeg.v4i2.751
Ergun, S.J., Owusu, P.A., & Rivas, M.F. (2019). Determinants of renewable energy consumption in Africa. Environmental Science and Pollution Research, 26(15), 15390-15405. https://doi.org/10.1007/s11356-019-04567-7
Gujarati, D.N. (2012). Basics of Econometrics, 5th ed. New York. MacGraw Hill.
Han, J., Zeeshan, M., Ullah, I., Rehman, A., & Afridi, F. E. A. (2022). Trade openness and the impact of urbanization on the consumption of renewable and non-renewable energy in China. Environmental Science and Pollution Research, 29(27), 41653-41668. https://doi.org/10.1007/s11356-021-18353-x
Hariani, E., Febriyastuti, R. W., & Tamonsang, M. (2022). An analysis of factors that affect CO2 emissions in 5 ASEAN country in 2011-2018. Optimum: Jurnal Ekonomi Dan Pembangunan, 12(1), 76-86. https://doi.org/10.12928/optimum.v12i1.5824
Haseeb, M., Kot, S., Hussain, H., & Jermsittiparsert, K. (2019). The impact of economic growth, environmental pollution, and energy consumption on health expenditure and R&D expenditure of ASEAN countries. Energy, 12(19), 3598. https://doi.org/10.3390/en12193598
Ichsan, M., Lockwood, M., & Ramadhani, M. (2022). National oil companies and fossil fuel subsidy regimes in transition: The case of Indonesia. The Extractive Industries and Society, 11, 101104.
https://doi.org/10.1016/j.exis.2022.101104
Ilyasa, W. N., Kurniawan, M. L. A., Lubis, F. R. A., & Salim, A. (2025). The role of credit for poverty alleviation in Indonesia: Evidence from panel data analysis. IJBE (Integrated Journal of Business and Economics), 9(2), 203-217. https://doi.org/10.33019/ijbe.v9i2.1101
Juwita, A. H., Suryanto, S., & Samudro, B. R. (2021). The impact of international tourism on economic growth and carbon dioxide emission in ASEAN five country. Optimum: Jurnal Ekonomi dan Pembangunan, 11(1), 1-11. https://doi.org/10.12928/optimum.v11i1.3393
Karunia, M. R., Komrulzaman, A., & Tjahjawandita, A. (2023). Energy consumption, financial development, and carbon emissions in Indonesia. Indonesian Journal of Economics and Development, 23(1), 81-91.
Khan, S., Afzal, S., Khan, J., & Khan, Z. (2024). Revisiting the role of renewable energy, government expenditure, exports, and imports, in economic growth: A Panel data analysis from selected Asian countries. Alternative Economics, 30(4), 781-795. https://doi.org/10.37075/EA.2024.4.05
Koengkan, M., Fuinhas, J.A., & Vieira, I. (2020). The reaction of fossil fuel consumption to trade openness in Latin American and Caribbean countries. Journal of Social Studies, 22(45), 142-170. https://doi.org/10.19093/res10861
Krugman, P. R., Obstfeld, M., & Melitz, M. J. (2012). International Economic Theory & Policy (Ninth Edit). Pearson Education.
Kuznets, S. (1955). Economic growth and income inequality. The American Economic Review, 65(1).
Lunku, H. S. (2025). The criticality of clean energy and ICT invesment in achieving environmental sustainability in the EU member states. Optimum: Jurnal Ekonomi dan Pembangunan, 15(2), 207-221. https://doi.org/10.12928/optimum.v15i2.12981
Mahmood, H., Maalel, N., & Zarrad, O. (2019). Trade openness and CO2 emissions: Evidence from Tunisia. Sustainability (Switzerland), 11(12). https://doi.org/10.3390/su11123295
Mankiw, N. G. (2018). Introduction to Macroeconomics, Ed.7. Washington. Worth Publisher.
Nazlioglu, S., Kassouri, Y., Kucukkaplan, I., & Soytas, U. (2022). Convergence of oil consumption: A historical perspective with a new concept. Energy Policy, 168 (January), 113150. https://doi.org/10.1016/j.enpol.2022.113150
Nguyen, T.A., Le, P.H., Nguyen, H.D., Luong, T.T., & Ngo, M.T. (2023). The effect of environmental accounting information disclosure on the financial performance of listed Vietnamese industrial companies: The role of leverage and big 4 moderation. CTU Journal of Innovation and Sustainable Development, 15(2), 126-138. https://doi.org/10.22144/ctu.jen.2023.027
Park, K., Lee, Y., & Han, J. (2021). An economic perspective on ending fossil fuel subsidies and moving towards a low-carbon society. Sustainability (Switzerland), 13(3), 1-17. https://doi.org/10.3390/su13031217
Perwithosuci, W., Anas, M., Hidayah, N., Putri, R. N., & Hadibasyir, H. Z. (2025). Environmental quality, economic growth and population density: A panel study in Indonesia. Optimum: Jurnal Ekonomi dan Pembangunan, 15(1), 154-163. https://doi.org/10.12928/optimum.v15i1.12559
Pham, D.T., & Nguyen, H.T. (2024). The effects of trade openness on environmental quality: Evidence from developing countries. Journal of Applied Economics, 27(1). https://doi.org/10.1080/15140326.2024.2339610
Rahmawati, A., & Robertus, M. H. (2023). The effect of electricity consumption, economic growth, industrialization, and trade openness on co2 emissions in Indonesia 1983-2019. Journal of Diponegoro Economics, 12(3), 13-21. https://doi.org/10.14710/djoe.39536
Ritvanen, J., Myöhänen, K., Pitkäoja, A., & Hyppänen, T. (2021). Industrial-scale absorption-enhanced gasification process modeling: One-dimensional simulation for the operation of a combined reactor system. Energy, 226, 120387. https://doi.org/10.1016/j.energy.2021.120387
Sari, I. T., Putri, Ye, & Selvia, N. (2024). The effect of the number of motor vehicles, number of population, energy subsidies, and trade openness on non-renewable energy consumption and economic growth in Indonesia. Indonesian Journal of Education Research, 4(3), 1067-1075. https://doi.org/10.31004/irje.v4i3.880
Septyani, D., & Hartati, S. (2024). Fossil energy consumption on economic growth. Journal of Economics, Business and Accounting (COSTING), 7(5), 1491-1498. https://doi.org/10.31539/costing.v7i5.11780
Setiawan, A., Tua, D. P., & Husin, M. E. (2019). The impact of fossil fuel consumption on Indonesia's gross domestic product and the reciprocal relationship between the two. Journal of Mineral and Coal Technology, 15(3), 213-223. https://doi.org/10.30556/jtmb.Vol15.No3.2019.931
Setyono, A. E., & Kiono, B. F. T. (2021). From fossil fuels to renewable energy: A portrait of Indonesia's oil and gas sector 2020-2050. Journal of New and Renewable Energy, 2(3), 154-162. https://doi.org/10.14710/jebt.2021.11157
Siregar, S. W., & Hasbi. (2023). Analysis of the influence of trade openness, energy consumption, and economic growth on carbon emissions in D-8 countries. Journal of Master of Sharia Economics, 2(1), 61-77.
Suripto, S., Salim, A., Kurniawan, M. L. A., Khasanah, U., & Athfal, A. A. (2025). Unveiling regional growth patterns spatial heterogeneity and infrastructure quality under a bayesian framework in Central Java. Eko-Regional: Jurnal Pembangunan Ekonomi Wilayah, 20(2), 214-234.
Todaro, M.P., & Smith, SC (2020). Economic Development (13th Ed). Pearson Education.
Umair, M., Yousuf, M. U., Cheema, A. R., & Ul-Haq, J. (2024). Assessing the environmental consequences of fossil fuel consumption in newly industrialized countries. International Journal of Energy Sector Management, 19(4), 1027-1044. https://doi.org/10.1108/IJESM-08-2024-0036
Wang, S., Yuan, Y., & Wang, H. (2019). Corruption, hidden economy, and environmental pollution: A spatial econometric analysis based on Chinese provincial panel data. International Journal of Environmental and Public Health Research, 16(16), 1-23. https://doi.org/10.3390/ijerph16162871
Yahoo, M., Salleh, N. H. M., Chatri, F., & Lin, M. (2024). Rationalization of fossil fuel subsidies and renewable energy initiatives in Malaysia: Results of the CGE analysis. Journal of Economics Malaysia, 58(3). https://doi.org/10.17576/JEM-2024-5803-5
Zhang, M., Li, X., Pai, C. H., Ding, H., & Zhang, X. (2023). Green credit and fossil fuel resource efficiency: Advancing sustainability in Asia. Resources Policy, 86(Part B), 104204. https://doi.org/10.1016/j.resourpol.2023.104204
Downloads
Published
Issue
Section
License
Copyright (c) 2026 Dwi Silfani, Noni Rozaini
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
