Assessing Japan's energy–environment nexus: Impacts of electricity use, fossil fuels, population dynamics and renewable energy transition

This study examines the dynamic relationships among electricity consumption (EC), fossil fuel (FF) consumption, renewable energy (RE) adoption, population (POP), population density (POD), economic growth (GDP), and environmental pollution (CO 2 emissions) in Japan over the period 2000–2023. Annual time-series data are analyzed using Johansen cointegration, the Vector Error Correction Model (VECM), Dynamic Ordinary Least Squares (DOLS), Fully Modified Ordinary Least Squares (FMOLS), Granger causality tests, impulse response functions, and forecast error variance decomposition. The empirical results confirm the existence of a long-run equilibrium relationship among the variables. The VECM results indicate that deviations from long-run equilibrium are corrected over time, while the long-run estimates show that higher EC, FF use, and EG increase CO 2 emissions. In contrast, RE consumption significantly reduces environmental pollution. POP density is found to intensify energy demand and environmental pressure, although Japan's demographic transition moderates overall energy consumption in the long run. Granger causality analysis reveals bidirectional causality between EC and EG, supporting the feedback hypothesis. In contrast, FF consumption Granger-causes environmental pollution, while RE mitigates emissions. Impulse-response and variance-decomposition analyses further demonstrate that shocks to FF consumption generate persistent increases in CO 2 emissions, whereas shocks to RE gradually reduce environmental degradation over time. These findings suggest that accelerating RE deployment, reducing dependence on FFs, improving energy efficiency, and strengthening smart-grid infrastructure are essential to achieving Japan's carbon-neutrality objectives while sustaining long-term EG.