Assessing trade-offs between renewable and non-renewable electricity sources in Australia for sustainable power generation

This study examines the relationship between renewable and nonrenewable electricity generation, economic growth, air transportation and carbon emissions in Australia, focusing on the tradeoffs between different electricity sources. Using annual data spanning 1985–2022, the analysis employs an autoregressive distributed lag (ARDL) bounds testing approach to capture both long-run equilibrium relationships and short-run dynamic adjustments within a unified econometric framework. The findings reveal that electricity generation from coal, air transport activity, and economic growth are significant drivers of carbon emissions in the long run, highlighting the persistence of carbon-intensive structural dynamics in the Australian economy. In contrast, hydropower generation exerts a statistically significant mitigating effect on emissions, confirming the role of renewable energy in supporting environmental sustainability. In the short run, the results indicate the presence of transitional adjustment dynamics rather than structural effects, with some variables exhibiting counterintuitive signs that reflect system rebalancing within the error-correction framework rather than permanent environmental impacts. The error correction term is negative and statistically significant, confirming the stability of the long-run relationship and indicating rapid adjustment toward equilibrium. Overall, the results demonstrate a clear structural trade-off between fossil fuel dependence and renewable energy expansion in Australia’s electricity sector. The study contributes to the literature by providing disaggregated evidence on electricity generation sources and their heterogeneous environmental impacts, offering policy-relevant insights for designing effective low-carbon energy transition strategies.