Investigating hydropower energy consumption's effect on Southeast Asia's path to achieving environmental sustainability and carbon neutrality

Abstract Hydropower presents significant environmental advantages over fossil fuels, particularly due to its minimal emissions during operation. This research examines the dynamic effects of hydropower energy consumption, fossil fuels, economic growth, manufacturing, agriculture, capital formation, and labor on CO 2 emissions in Southeast Asian (SEA) countries from 2000 to 2022. Utilizing methods such as the Autoregressive Distributed Lag (ARDL), Vector Error Correction Model (VECM), and Dumitrescu-Hurlin (D-H) causality tests, the study provides empirical insights into the interactions among these variables. According to our findings, CO 2 emissions decrease when hydropower energy consumption and capital formation rise. In contrast, factors such as fossil fuels, economic growth, agriculture, and labor are associated with rising CO 2 emissions. The impulse response analysis indicates that shocks in hydropower energy consumption result in a decrease in CO 2 emissions. Additionally, the findings reveal a bidirectional causality between CO 2 emissions and hydropower energy consumption. These results underscore the critical importance of sustainable energy policies in SEA countries, promoting investment in hydropower and renewables to mitigate emissions and support environmental sustainability. To meet the region's long-term environmental and economic objectives, it is imperative to reduce reliance on fossil fuels, improve energy efficiency, and promote green technologies. Graphical Abstract