Virtual Booth

The rise in global temperatures, driven by increasing carbon dioxide emissions, has become a critical global issue, particularly for developing countries such as Malaysia, which face challenges in transitioning to cleaner energy due to limited resources and continued reliance on fossil fuels like coal and oil. In this context, natural gas emerges as a practical transitional energy source because it generates lower emissions while still supporting economic activities. This study addresses this issue by introducing a novel Fuel Switching Variable that captures the shift from coal and oil to natural gas, allowing for a more direct and accurate assessment of how changes in energy consumption patterns affect carbon emissions—an area that has been largely overlooked in previous studies. In addition, this research makes a unique contribution by focusing specifically on the industrial sector, being the first study in Malaysia to examine the impact of gas consumption on industrial output rather than overall economic growth. Using the Autoregressive Distributed Lag approach, the study develops two models to provide a comprehensive analysis. The first model shows that fuel switching toward natural gas significantly reduces carbon dioxide emissions, although economic growth and population expansion continue to increase emissions. The second model reveals that gas consumption significantly enhances industrial output in both the short and long run. These findings suggest that natural gas offers a balanced solution by simultaneously reducing environmental damage and supporting industrial performance. Therefore, policymakers should promote the transition from coal and oil to gas, enforce stricter energy efficiency standards, and invest in cleaner technologies and gas infrastructure. Overall, this study provides important insights for achieving sustainable development by demonstrating that natural gas can serve as an effective bridge between economic growth and environmental protection.