Can Human Capital Serve as a Gateway to the Renewable Energy Transition? Empirical Evidence from Emerging and Developing Asia

Abstract

Energy consumption is deeply connected to development outcomes; however, heavy reliance on non-renewable energy undermines the environmental sustainability of economies, a key concern addressed under Sustainable Development Goal 7. This study uses the Pooled Mean Group Autoregressive Distributed Lag approach to evaluate the impact of human capital on renewable energy consumption from 1990 to 2021 in order to examine the renewable energy transition in emerging and developing Asia. The long-run results show that human capital significantly fosters the consumption of renewable energy, which is adversely affected by employment in services, trade openness, economic growth and urbanization, indicating structural dependence on conventional energy sources despite economic progress and increasing urbanization. The robustness of these findings was assessed using dynamic ordinary least squares. These results affirm the sustainability trait of human capital and emphasize its pivotal role among the existing drivers of the renewable energy transition. Short-run estimates show a statistically insignificant impact of human capital, employment in services, trade openness, economic growth and urbanization on renewable energy consumption, highlighting the dominance of long-run structural dynamics. A stable long-run equilibrium with fully corrected deviations across time is confirmed by the negative coefficient of the error-correction term. These findings exhibit the vital role of human capital in encouraging renewable energy consumption, while pointing to trade patterns, urban pressures and fossil-fuel-dependent growth structures as persistent barriers. The study highlights the necessity of focused policy reforms that strengthen human capital, reshape energy-intensive urban systems and align trade and growth strategies with long-term renewable energy goals.