The Decarbonisation Drive: A Dynamic Autoregressive Distributed Lag Analysis of the Relationship Between Oil, Natural Gas, Coal Consumption, and <scp> CO ₂ </scp> Emissions in Malaysia

ABSTRACT Globally, nations are fighting to contain the threat of climate change, as global conventions necessitate that countries take strict action on climate change to minimise the deleterious effects of human activities, such as the unwarranted use of fossil fuels. Fossil fuels are the primary source of greenhouse gas emissions that cause global warming and climate change. Against this background, this study explores the nexus between disaggregated fossil fuel consumption (oil, gas, and coal), economic growth, external trade, and globalisation using a Dynamic Autoregressive Distributed Lag (ARDL) model for Malaysia over the period 1970–2021. In addition, it offers a simulation of energy efficiency targets to abate CO 2 emissions to achieve Malaysia's net zero emissions target by 2050. The empirical results reveal a long‐term association between the outlined variables, confirmed by the ARDL bound test for cointegration. Predominantly, fossil fuel consumption and globalisation show a significant association with higher CO 2 emissions in Malaysia, while the link with trade openness is less clear. These outcomes were validated using the Kernel‐based Regularised Least Squares (KRLS) technique. This study provides valuable policy suggestions, such as implementing a carbon tax, energy efficiency labelling and standardisation programmes, and green preferential credit, to improve environmental quality in Malaysia.