Dynamic Nexus Between Electricity Consumption, Energy Structure, FDI, Economic Growth, and Carbon Emissions in the Philippines: Evidence from the ARDL Approach

Understanding the interactions among energy consumption, economic growth, foreign direct investment (FDI), and environmental quality is essential for achieving sustainable development in emerging economies. Although numerous studies have examined these relationships, limited evidence exists for the Philippines, particularly regarding the integrated role of electricity consumption, fossil fuel dependency, renewable energy adoption, and FDI in shaping carbon emissions. This study investigates the dynamic nexus among these variables using annual data for the period 1990–2023. The dynamic Autoregressive Distributed Lag framework is employed to estimate both long-run and short-run relationships and to simulate the adjustment paths following changes in key explanatory variables. The results reveal a long-run equilibrium relationship among the variables. Fossil fuel consumption is identified as the primary driver of carbon emissions, while renewable energy contributes to emission mitigation. Economic growth and electricity consumption increase environmental pressure, whereas FDI promotes economic development without exerting a significant direct impact on emissions. The findings suggest that transforming the energy structure rather than restricting electricity demand represents the most effective pathway toward emission reduction. This study contributes to the literature by providing an integrated assessment of the energy–economy–environment nexus and generating policy-relevant evidence for the Philippines and other developing economies undergoing energy transition.