Exploring asymmetric shocks of carbon emissions to renewable energy sustainability indicators using the NARDL approach

Purpose This study aims to explore the short- and long-run asymmetric link between carbon emission (CE), renewable energy generation (REG), renewable energy capacity (REC), renewable energy investment (REI) and energy demand (ED) to analyze the impact of positive and negative asymmetric shocks of carbon emissions. Design/methodology/approach The nonlinear autoregressive distributed lag (NARDL) model was used to capture the asymmetric effects of the independent variables REG, REC, REI and ED on the dependent variable CE from 1990 to 2024. Findings The findings suggest that all independent variables are associated with the CE in the long run. This relationship confirms that changes in REG, REC, REI and ED significantly impact the CE. The results indicate that positive shocks in renewable energy generation have a stronger impact on emission reduction than negative shocks have on increasing emissions. The short-run asymmetric value of REG is 1.371, which is positive and significant at a 1% level, indicating that changes in REG do not have a stagnant effect on CE. Research limitations/implications Firstly, the analysis focuses on aggregate renewable energy generation and does not differentiate between different types of renewables (e.g. solar, wind, hydro). Future studies could explore the individual effects of different renewable energy sources on emissions and additional variables such as energy prices and government subsidies for the clean energy investment. Practical implications The study has several policy and practical implications. First, policymakers should prioritize expanding renewable energy infrastructure, as the impact of increasing renewable energy generation is more pronounced in reducing emissions than the adverse effects of its reduction. Governments should design policies that encourage sustained investment in renewable energy to ensure long-term emission reductions. Originality/value The annual data on CE, REC, REG, REI and ED from the International Energy Agency and International Renewable Energy Agency for the period of 1990–2024 were used to incorporate carbon emissions during the Paris Agreement and the COVID-19 pandemic.