Energy Transition and Environmental Efficiency in <scp>ASEAN+6</scp> : The Dominant Role of Globalisation Over Renewable Energy

ABSTRACT The energy‐environment nexus is increasingly being affected by the rapid industrialisation and escalating energy demand of ASEAN economies, which has increased environmental degradation. The complex interactions between environmental factors and ecosystem components are explored across various countries, highlighting temporal dynamics that can guide environmental management and conservation efforts. An autoregressive distributed lag (ARDL) model is employed to examine both the long‐run equilibrium relationships and the short‐run dynamics, offering a more nuanced understanding of the immediate and long‐term environmental impacts using panel data from ASEAN+6 countries. The results indicate that there are important long‐run relationships between environmental efficiency and important energy and globalisation variables. The higher the consumption of biomass raw materials, the more efficient the environment. On the other hand, the use of fossil fuels has a significant negative impact on environmental efficiency. Renewables play an important role in energy transition strategies, with a higher proportion of renewables in total energy consumption being correlated with higher environmental efficiency. Most importantly, globalisation is strongly correlated with greater environmental efficiency, indicating that global integration and technology transfer mechanisms are conducive to better environmental performance. But short‐run dynamics suggest that adjustment is limited, with only lagged globalisation effects being significant, suggesting that short‐term deviations from long‐run equilibrium last longer than anticipated. The stability of fossil fuel and renewable energy results is verified by robustness tests. Policymakers should focus on investment in renewables, fossil fuel subsidy reform and use international cooperation mechanisms to speed up the energy transition, while addressing short‐term adjustment issues through targeted industrial policy measures.