Hydropower and Carbon Emissions in Vietnam: Revisiting the Energy-Environment Nexus through an ARDL Analysis

Abstract

This study investigates the dynamic relationship between carbon dioxide (CO 2 ) emissions, economic growth, energy consumption, and hydropower in Vietnam over the period 1990-2023 using the autoregressive distributed lag (ARDL) approach. The bounds testing results suggest a possible long-run relationship among the variables, although the evidence for cointegration remains inconclusive. The error-correction term indicates a stable, albeit gradual, adjustment toward equilibrium following short-term shocks. The empirical findings reveal that energy consumption significantly increases CO 2 emissions in the short run, highlighting Vietnam’s persistent dependence on conventional energy sources. By contrast, hydropower does not exhibit a statistically significant short-run effect on emissions within the estimated model. However, neither energy consumption nor hydropower shows a statistically significant long-run impact in the ARDL framework, suggesting that deeper structural characteristics of Vietnam’s energy system may dominate long-term emission trajectories. Economic growth also does not exhibit a direct, statistically robust long-run effect on carbon emissions within the linear ARDL framework, suggesting that environmental outcomes may depend more on broader structural factors, such as technological progress, the energy transition, and improvements in energy efficiency. This study contributes to the existing literature by explicitly disaggregating hydropower from aggregate energy consumption, thereby allowing for a more differentiated assessment of environmental effects across energy sources. The findings suggest that, while hydropower remains an important component of Vietnam’s renewable energy strategy, its estimated environmental effects are not statistically robust in either the short or long-run. These results underscore the importance of broader renewable energy diversification, improved energy efficiency, and stronger institutional support for Vietnam’s low-carbon transition.