Does human capital and financial development promote sustainable energy transition? Evidence from major Asian economies

Purpose This study aims to address two interrelated research questions: how do human capital (HC) and financial development (FD) influence the energy transition in major Asian economies? and how does their impact differ across total, nonrenewable and renewable energy consumption? Design/methodology/approach This study uses advanced panel econometric methods that account for cross-sectional dependence, slope heterogeneity and mixed integration orders. Long-run relationships are examined using the Westerlund cointegration test, while short and long-run effects are estimated through the cross-sectionally augmented autoregressive distributed lag approach with robustness confirmed by the augmented mean group estimator. Findings The results indicate that HC significantly affects total, nonrenewable and renewable energy consumption, with the strongest effect observed for renewable energy, highlighting its critical role in promoting cleaner energy adoption. In contrast, FD mainly drives total and nonrenewable energy consumption, suggesting that existing financial systems remain biased toward carbon-intensive sectors and play a limited role in fostering renewable energy use. Economic growth and trade openness further influence energy consumption patterns. Practical implications The findings highlight the importance of investing in HC, especially in education and green skills, to facilitate renewable energy diffusion and technological innovation. Financial sector reforms are needed to redirect capital flows toward green and sustainable energy projects through the expansion of green finance instruments. Moreover, coordinated trade and technology policies can strengthen Asia’s transition toward a sustainable and low-carbon energy system. Originality/value This study provides new empirical evidence on the roles of HC and FD in shaping total, nonrenewable and renewable energy consumption in major Asian economies using a unified econometric framework that accounts for cross-sectional dependence and heterogeneity.