The impacts of the 1997 Asian financial crisis and the 2008 global financial crisis on renewable energy consumption and carbon dioxide emissions for developed and developing countries

This paper examines whether the 1997 Asian financial crisis affected the renewable energy/carbon dioxide (CO2) emissions relationship differently when compared to the 2008 global financial crises. Using the Dynamic Panel Data Model, we examine separately the impact of the 1997 crisis and the 2008 crises on the stated relationship for annual data between the 1987–2018 period for a group of high, upper-middle, and lower middle-income countries. Our findings suggest that the results were crisis and country specific. For the overall sample, the relationship between the two variables was positive (and significant post-1997 and pre-2008 crises) but negative post-2008 crisis. In contrast, the positive relationship remained unchanged for the lower middle-income subsample through the two crises. We also find evidence that the 1997 Asian crisis altered the relationship differently than the 2008 financial crisis especially for the upper and middle-income groups. Clearly, reduction of CO2 emissions may not be guaranteed even if host countries adopt renewable energy sources since country income levels and the nature of the crisis may matter. Future research may consider how the degree of pollution controls and differential costs of renewable energy adoption in countries may alter this relationship.