The Green Enigma: How Taxes, Technology and Growth Outline Carbon Emissions in Malaysia
DOI:
https://doi.org/10.55737/trt/v-viii.394Keywords:
Environmental Taxes, Technological Innovation, VECM, Economic Growth, Carbon Emissions, Malaysia, Johansen CointegrationAbstract
This study examines the repercussion of environmental taxes, technological innovation, and economic augmentation on carbon emanation in Malaysia during 1990–2021. The study applied a deductive research approach and used annual time-series data attained from secondary sources. Econometric analyses were carried out using EViews. To check the homogeneity of variables, the unit root test is employed, and to determine long-run relationship of variables, Johansen cointegration test is executed, after obtaining the relationship Vector Error Correction Model (VECM) to examine the long-run causality and short-run dynamic linkage. Empirical results prove that environment taxes play significantly and positively on carbon emission and it can significantly reduce carbon emissions. However economic growth and technological advancement had no significant and positively related on carbon emissions. Long-run relationship also proved by VECM test and the speed of convergence to long-run equilibrium was determined.
References
Ali, W., Abdullah, A., & Azam, M. (2016). The dynamic linkage between technological innovation and carbon dioxide emissions in Malaysia: an autoregressive distributed lagged bound approach. International Journal of Energy Economics and Policy, 6(3), 389-400. https://izlik.org/JA44SX72LM
Ali, T. M., Kausar Kiani, A., Bashir, T., & Khan, T. N. (2021). R&D expenditure as an accelerator of economic growth with special reference to developing countries. Journal of Business and Social Review in Emerging Economies, 7(3), 561-589. https://doi.org/10.26710/jbsee.v7i3.1842
Amri, F., Zaied, Y. B., & Lahouel, B. B. (2019). ICT, total factor productivity, and carbon dioxide emissions in Tunisia. Technological Forecasting and Social Change, 146, 212-217. https://doi.org/10.1016/j.techfore.2019.05.028
Anwar, A., Chaudhary, A. R., Malik, S., & Bassim, M. (2021). Modelling the macroeconomic determinants of carbon dioxide emissions in the G-7 countries: The roles of technological innovation and institutional quality improvement. Global Business Review, 26(3), 823-845. https://doi.org/10.1177/09721509211039392
Balsalobre-Lorente, D., Shahbaz, M., Roubaud, D., & Farhani, S. (2018). How economic growth, renewable electricity and natural resources contribute to CO2 emissions? Energy Policy, 113, 356-367. https://doi.org/10.1016/j.enpol.2017.10.050
Bashir, M. F., MA, B., Shahbaz, M., & Jiao, Z. (2020). The nexus between environmental tax and carbon emissions with the roles of environmental technology and financial development. PLOS ONE, 15(11), e0242412. https://doi.org/10.1371/journal.pone.0242412
Chai, S., Yang, J., Bi, X., Tang, L., Zhang, M., & Zhu, J. (2026). Synergy or conflict? Assessing the combined emission reduction effects of environmental taxation and carbon trading in China's power sector. Utilities Policy, 98, 102084. https://doi.org/10.1016/j.jup.2025.102084
Chen, P., Rao, M., Vasa, L., Xu, Y., & Zhao, X. (2023). Spatial effects and heterogeneity analysis of the impact of environmental taxes on carbon emissions in China. Heliyon, 9(11), e21393. https://doi.org/10.1016/j.heliyon.2023.e21393
Chen, W., Si, W., & Chen, Z. (2020). How technological innovations affect urban eco-efficiency in China: A prefecture-level panel data analysis. Journal of Cleaner Production, 270, 122479. https://doi.org/10.1016/j.jclepro.2020.122479
Daly, H., Ahmed, M., Ahmed, Yahia, E., Elaageb, H., Gomaa, S., Mobarak, W., & Elshaabany, M. M. (2024). The dynamic relationships between oil products consumption and economic growth in Saudi Arabia: Using ARDL cointegration and Toda-Yamamoto Granger causality analysis. Energy Strategy Reviews, 54, 101470–101470. https://doi.org/10.1016/j.esr.2024.101470
Doğan, B., Chu, L. K., Ghosh, S., Diep Truong, H. H., & Balsalobre-Lorente, D. (2022). How environmental taxes and carbon emissions are related in the G7 economies? Renewable Energy, 187, 645-656. https://doi.org/10.1016/j.renene.2022.01.077
Erdogan, S., & Solarin, S. A. (2026). Quantification of the impact of innovation and human capital on sustainable development: A panel data analysis for newly industrialized countries. Quality & Quantity, 60(2), 7679-7699. https://doi.org/10.1007/s11135-026-02575-7
Freire-González, J., Padilla Rosa, E., & Raymond, J. L. (2024). World economies’ progress in decoupling from CO2 emissions. Scientific Reports, 14(1). https://doi.org/10.1038/s41598-024-71101-2
Hao, W., Rasul, F., Bhatti, Z., Hassan, M. S., Ahmed, I., & Asghar, N. (2021). A technological innovation and economic progress enhancement: An assessment of sustainable economic and environmental management. Environmental Science and Pollution Research, 28(22), 28585-28597. https://doi.org/10.1007/s11356-021-12559-9
Jama, A. B., Egdair, I. M., Abdelsalam, M. K., & Daud, S. N. (2026). Dynamic effects of economic growth, renewable energy usage, forest area, tourism, and agriculture on CO2 emissions in Malaysia. Discover Sustainability, 7(1). https://doi.org/10.1007/s43621-026-03232-7
Junsheng, H., Mu, Y., Masud, M. M., Akhtar, R., Saif, A. N., Islam, K. M., & Hafiz, N. (2024). Navigating the nexus: Unraveling technological innovation, economic growth, trade openness, ICT, and CO2 emissions through symmetric and asymmetric analysis. Humanities and Social Sciences Communications, 11(1). https://doi.org/10.1057/s41599-024-03092-4
Kaika, D., & Zervas, E. (2013). The environmental Kuznets curve (EKC) theory—Part a: Concept, causes and the CO2 emissions case. Energy Policy, 62, 1392-1402. https://doi.org/10.1016/j.enpol.2013.07.131
Karedla, Y., Mishra, R., & Patel, N. (2021). The impact of economic growth, trade openness and manufacturing on CO2 emissions in India: An autoregressive distributive lag (ARDL) bounds test approach. Journal of Economics, Finance and Administrative Science, 26(52), 376-389. https://doi.org/10.1108/jefas-05-2021-0057
Khan, S. A., Yu, Z., & Sharif, A. (2021). No silver bullet for de-carbonization: Preparing for tomorrow, today. Resources Policy, 71, 101942. https://doi.org/10.1016/j.resourpol.2020.101942
Kuznets, S. (1955). Economic Growth and Income Inequality. The American Economic Review, 45(1), 1–28. http://www.jstor.org/stable/1811581
Lahouel, B. B., Taleb, L., Zaied, Y. B., & Managi, S. (2021). Does ICT change the relationship between total factor productivity and CO2 emissions? Evidence based on a nonlinear model. Energy Economics, 101, 105406. https://doi.org/10.1016/j.eneco.2021.105406
Lau, L., Choong, Y., Ching, S., Wei, C., Senadjki, A., Choong, C., & Seow, A. (2022). Expert insights on Malaysia’s residential solar-energy policies: Shortcomings and recommendations. Clean Energy, 6(4), 619-631. https://doi.org/10.1093/ce/zkac043
Lewis, W. A. (2013). Theory of economic growth. Routledge.
Liu, H., Wong, W., The Cong, P., Nassani, A. A., Haffar, M., & Abu-Rumman, A. (2023). Linkage among urbanization, energy consumption, economic growth and carbon emissions. Panel data analysis for China using ARDL model. Fuel, 332, 126122. https://doi.org/10.1016/j.fuel.2022.126122
Liu, Y. (2025). Whether fintech, natural resources, green finance and environmental tax affect CO2 emissions in China? A step towards green initiatives. Energy, 320, 135181. https://doi.org/10.1016/j.energy.2025.135181
Loganathan, N., Mursitama, T. N., Pillai, L. L., Khan, A., & Taha, R. (2020). The effects of total factor of productivity, natural resources and green taxation on CO2 emissions in Malaysia. Environmental Science and Pollution Research, 27(36), 45121-45132. https://doi.org/10.1007/s11356-020-10291-4
Muqattash, R., Kolsi, M. C., Albitar, K., & Sharairi, M. (2026). Does carbon tax implementation advance sustainable development in the United Arab Emirates? Perceptions of academics and professionals. Sustainable Futures, 11, 101603. https://doi.org/10.1016/j.sftr.2025.101603
Nguyen, N. A., Mai Vu, T. T., Phuong Thu, N. T., Anh Nguyen, T. L., & Luong, H. G. (2026). Economic growth, finance, and renewable energy in shaping the United States carbon emissions. Energy Conversion and Management: X, 30, 101864. https://doi.org/10.1016/j.ecmx.2026.101864
Ocansey, E. O., & Haywood-Dadzie, D. O. (2025). Impact of environmental taxes on carbon emissions: Systematic review. African Journal of Economics and Sustainable Development, 8(5), 18. https://doi.org/10.52589/ajesd-wyt3pfjh
Osiobe, E. U. (2020). A Cointegration analysis of economic growth and CO_2 emissions: A case study of Malaysia. Environmental Management and Sustainable Development, 9(1), 1. https://doi.org/10.5296/emsd.v9i1.15812
Porter, M. (1996). America’s green strategy. In Business and the environment: A reader (p. 1072).
Porter, M. E., & Linde, C. V. (1995). Toward a new conception of the environment-competitiveness relationship. Journal of Economic Perspectives, 9(4), 97-118. https://doi.org/10.1257/jep.9.4.97
Rakpho, P., Chitksame, T., & Kaewsompong, N. (2023). The effect of environmental taxes and economic growth on carbon emission in G7 countries applying panel kink regression. Energy Reports, 9, 1384-1391. https://doi.org/10.1016/j.egyr.2023.05.185
Ruslan, S. M. M., & Mokhtar, K. (2026). Green finance as a growth driver: Malaysia’s transition to a sustainable Economy. Journal of Economics and Sustainability, 8(2), 71-97. https://doi.org/10.32890/jes2026.8.2.5
Saboori, B., Sulaiman, J., & Mohd, S. (2012). Economic growth and CO2 emissions in Malaysia: A cointegration analysis of the environmental Kuznets curve. Energy Policy, 51, 184-191. https://doi.org/10.1016/j.enpol.2012.08.065
Sagar, A. (2004). Technology innovation and energy. Encyclopedia of Energy, 27-43. https://doi.org/10.1016/b0-12-176480-x/00447-2
Saidi, K., & Hammami, S. (2015). The impact of energy consumption and CO2 emissions on economic growth: Fresh evidence from dynamic simultaneous-equations models. Sustainable Cities and Society, 14, 178-186. https://doi.org/10.1016/j.scs.2014.05.004
Salman, M., Long, X., Dauda, L., Mensah, C. N., & Muhammad, S. (2019). Different impacts of export and import on carbon emissions across 7 ASEAN countries: A panel quantile regression approach. Science of The Total Environment, 686, 1019-1029. https://doi.org/10.1016/j.scitotenv.2019.06.019
Sharif, A., Godil, D. I., Xu, B., Sinha, A., Rehman Khan, S. A., & Jermsittiparsert, K. (2020). Revisiting the role of tourism and globalization in environmental degradation in China: Fresh insights from the quantile ARDL approach. Journal of Cleaner Production, 272, 122906. https://doi.org/10.1016/j.jclepro.2020.122906
Sharif, A., Kocak, S., Khan, H. H., Uzuner, G., & Tiwari, S. (2023). Demystifying the links between green technology innovation, economic growth, and environmental tax in ASEAN-6 countries: The dynamic role of green energy and green investment. Gondwana Research, 115, 98-106. https://doi.org/10.1016/j.gr.2022.11.010
Wang, B., Liu, L., Huang, G., Li, W., & Xie, Y. (2018). Effects of carbon and environmental tax on power mix planning - A case study of Hebei province, China. Energy, 143, 645-657. https://doi.org/10.1016/j.energy.2017.11.025
Wang, D., Zhao, L., Yang, F., & Chen, K. (2022). Performance evaluation of the Chinese high-tech industry: A two-stage DEA approach with feedback and shared resource. Journal of Industrial and Management Optimization, 18(5), 3315. https://doi.org/10.3934/jimo.2021114
Wang, Z., & Zhu, Y. (2020). Do energy technology innovations contribute to CO2 emissions abatement? A spatial perspective. Science of The Total Environment, 726, 138574. https://doi.org/10.1016/j.scitotenv.2020.138574
Waweru, N. M., Munyoki, E., & Uliana, E. (2008). The effects of behavioural factors in investment decision-making: A survey of institutional investors operating at the Nairobi stock exchange. International Journal of Business and Emerging Markets, 1(1), 24. https://doi.org/10.1504/ijbem.2008.019243
Wolde-Rufael, Y., & Mulat-Weldemeskel, E. (2021). Do environmental taxes and environmental stringency policies reduce CO2 emissions? Evidence from 7 emerging economies. Environmental Science and Pollution Research, 28(18), 22392-22408. https://doi.org/10.1007/s11356-020-11475-8
Wu, F., Dogan, B., Tiwari, S., Ghosh, S., Bashir, M. F., & Balsalobre‐Lorente, D. (2026). From policy to practice: How eco‐innovation, green finance, and environmental taxes drive carbon neutrality and sustainable development. Sustainable Development, 34(2), 2146-2165. https://doi.org/10.1002/sd.70422
Wu, G., Liu, X., & Cai, Y. (2024). The impact of green finance on carbon emission efficiency. Heliyon, 10(1), e23803. https://doi.org/10.1016/j.heliyon.2023.e23803
Yunzhao, L. (2022). Modelling the role of eco innovation, renewable energy, and environmental taxes in carbon emissions reduction in E−7 economies: Evidence from advance panel estimations. Renewable Energy, 190, 309-318. https://doi.org/10.1016/j.renene.2022.03.119
Zhang, W., Zhu, Z., Liu, X., & Cheng, J. (2022). Can green finance improve carbon emission efficiency? Environmental Science and Pollution Research, 29(45), 68976-68989. https://doi.org/10.1007/s11356-022-20670-8
Zhao, J., Taghizadeh-Hesary, F., Dong, K., & Dong, X. (2022). How green growth affects carbon emissions in China: The role of green finance. Economic Research-Ekonomska Istraživanja, 36(1), 2090-2111. https://doi.org/10.1080/1331677x.2022.2095522
Downloads
Published
Issue
Section
License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
