Renewable Energy, Trade Openness, and CO₂ Emissions in G20 Economies: Evidence from Dynamic Panel GMM
Keywords:
Renewable Energy, Trade Openness, CO2 Emissions, Panel GMMAbstract
The widening gap between domestic soybean demand and local production has raised concerns over the economic sustainability of soybean farming in Indonesia. This study examines the determinants of production cost, cost efficiency, and cost inefficiency in soybean farming in Central Java Province, focusing on Grobogan and Blora Regencies. Using farm level data from 200 soybean farmers, the study applies a stochastic cost frontier model and a second-stage regression of predicted cost inefficiency. The results show that output and labor wage significantly increase total production cost, while fertilizer price is weakly significant and seed price is not statistically significant. The mean cost efficiency score is 0.8904, indicating that farmers could reduce production costs by approximately 10.96 percent while maintaining the same output and input-price conditions. The second-stage results show that planting frequency and irrigation access are significantly associated with lower cost inefficiency, while age, farming experience, and education are not statistically significant. These findings suggest that cost inefficiency in soybean farming is more closely related to
production routines and water access than to general farmer characteristics. Policy support should therefore focus on improving input timing, labor management, irrigation access, and repeated production learning among smallholder soybean farmers.
Downloads
References
A’yun, I. Q., Nguyen, T. T. H., Darsono, S. N. A. C., Pho, T. V, Khoirudin, R., & Lubis, F. R. A. (2026). Economic development and inequality in human development: The mediating roles of urbanisation, non-renewable energy consumption, economic complexity, and globalisation. Sustainable, 100220. https://doi.org/10.1016/j.scowo.2026.100220
Ahmed, K., Shahbaz, M., & Kyophilavong, P. (2016). Revisiting the emissions-energy-trade nexus: evidence from the newly industrializing countries. Environmental Science and Pollution Research, 23, 7676–7691. https://doi.org/10.1007/s11356-015-6018-x
Arellano, M., & Bond, S. (1991). Some test of specification for panel data: Monte carlo evidence and an application to employment equations. The Review of Economic Studies, 58(2), 277–297. https://doi.org/10.2307/2297968
Bakri, M. A., Chia, Y.-E., & Chia, R. C.-J. (2025). Trade openness and carbon emissions using threshold approach: evidence from selected Asian countries. Carbon Research, 4. https://doi.org/10.1007/s44246-025-00211-x
Baltagi, B. H. (2005). Econometric Analysis of Panel Data (3rd ed.). In John Wiley & Sons.
Ben Jebli, M., Ben Youssef, S., & Ozturk, I. (2016). Testing environmental Kuznets curve hypothesis: The role of renewable and non-renewable energy consumption and trade in OECD countries. Ecological Indicators, 60, 824–831. https://doi.org/10.1016/j.ecolind.2015.08.031
Destek, M. A., & Sinha, A. (2020). Renewable, non-renewable energy consumption, economic growth, trade openness and ecological footprint: Evidence from organisation for economic Co-operation and development countries. Journal of Cleaner Production, 242, 118537. https://doi.org/10.1016/j.jclepro.2019.118537
Dogan, E., & Seker, F. (2016). Determinants of CO2 emissions in the European Union: The role of renewable and non-renewable energy. Renewable Energy, 94, 429–439. https://doi.org/10.1016/j.renene.2016.03.078
Dou, Y., Chen, F., Kong, Z., & Dong, K. (2023). Re-estimating the trade openness–carbon emissions nexus: a global analysis considering nonlinear, mediation, and heterogeneous effects. Applied Economics, 55(57), 6793–6808. https://doi.org/10.1080/00036846.2023.2166659
Dou, Y., Dong, K., Jiang, Q., & Dong, X. (2020). How Does Trade Openness Affect Carbon Emission? New International Evidence. Journal of Environmental Assessment Policy and Management, 22(03–04), 225005. https://doi.org/10.1142/S1464333222500053
Ho, S.-Y., & Iyke, B. N. (2019). Trade Openness and Carbon Emissions: Evidence from Central and Eastern European Countries. Review of Economics, 70(1). https://doi.org/10.1515/roe-2018-0001
Horobet, A., Belascu, L., Radulescu, M., Balsalobre-Lorente, D., Botoroga, C.-A., & Negreanu, C.-C. (2024). Exploring the Nexus between Greenhouse Emissions, Environmental Degradation and Green Energy in Europe: A Critique of the Environmental Kuznets Curve. Energies, 17(20), 5109–5120. https://doi.org/10.3390/en17205109
Khan, A., & Safdar, S. (2023). Symmetric and asymmetric analysis of trade and environment in Pakistan. Environmental Science and Pollution Research, 30, 11399–11416. https://doi.org/10.1007/s11356-022-22669-7
Koc, S., & Bulus, G. C. (2020). Testing validity of the EKC hypothesis in South Korea: role of renewable energy and trade openness. Environmental Science and Pollution Research, 27, 29043–29054. https://doi.org/10.1007/s11356-020-09172-7
Lestari, Y. T., Kurniawan, M. L. A., & Khan, Z. (2024). Dynamic Analysis of Environmental Degradation and Economic Activities in the Asia-Pacific Region. Journal of Management Studies and Development, 3(2), 69–80. https://doi.org/10.56741/jmsd.v3i02.503
Ling, C. H., Ahmed, K., Muhamad, R. B., & Shahbaz, M. (2015). Decomposing the trade-environment nexus for Malaysia: what do the technique, scale, composition, and comparative advantage effect indicate? Environmental Science and Pollution Research, 22, 20131–20142. https://doi.org/10.1007/s11356-015-5217-9
Mata, J. P. V, Bautista, M. G. G., Granda, L. E. S., & Moreano, E. G. Z. (2024). Evaluating the Environmental Kuznets Curve: The Role of Renewable Energy, Economic Growth, Urban Density and Trade Openness on CO2 Emissions. An Analysis for High-Income Countries Using the CS-ARDL Model. International Journal of Energy Economics and Policy, 14(6), 580–596. https://doi.org/10.32479/ijeep.16740
Mu’min, M. S., Susilowati, I., Qudsyina, H., Wahyuni, H. A., Rismawati, S., Kusumawardhani, H. A., & Miah, M. R. (2023). Nexus Between Economic Growth, Renewable Energy, Industry Value Added and CO2 Emissions in ASEAN. Jurnal Ekonomi Pembangunan: Kajian Masalah Ekonomi Dan Pembangunan, 24(2), 265–281. https://doi.org/10.23917/jep.v24i2.23165
Nguyen, Q. K. (2026). Green Energy Is Not Always Green: An Analysis of Renewable Energy, Economic Growth, and CO2 Emissions in Developing Countries. Sustainable Development, Early View. https://doi.org/10.1002/sd.70970
Poumanyvong, P., & Kaneko, S. (2010). Does urbanization lead to less energy use and lower CO2 emissions? A cross-country analysis. Ecological Economics, 70(2), 434–444. https://doi.org/10.1016/j.ecolecon.2010.09.029
Shahbaz, M., Nasreen, S., Ahmed, K., & Hammoudeh, S. (2017). Trade openness–carbon emissions nexus: The importance of turning points of trade openness for country panels. Energy Economics, 61, 221–232. https://doi.org/10.1016/j.eneco.2016.11.008
Sulaiman, C., Leng, N. S., Abdul-Rahim, A. S., Muhammad-Jawad, I., & Samad, N. S. A. (2023). Fresh evidence on the influence of trading activities on CO2 emissions in developed and developing high CO2 emitting countries: long panel data modelling. International Journal of Sustainable Economy, 15(4). https://doi.org/10.1504/IJSE.2023.134186
Suripto, S., Salim, A., Kurniawan, M. L. A., Khasanah, U., & Athfal, A. A. (2025). Unveiling Regional Growth Patterns Spatial Heterogeneity and Infrastructure Quality under a Bayesian Framework in Central Java. Eko-Regional: Jurnal Pembangunan Ekonomi Wilayah, 20(2), 214–234.
Vo, D. H., Vo, A. T., Ho, C. M., & Nguyen, H. M. (2020). The role of renewable energy, alternative and nuclear energy in mitigating carbon emissions in the CPTPP countries. Renewable Energy, 161, 278–292. https://doi.org/10.1016/j.renene.2020.07.093
Wang, Q., Wang, L., & Li, R. (2024). Trade openness helps move towards carbon neutrality-Insight from 114 countries. Sustainable Development, 32(1), 1081–1095. https://doi.org/10.1002/sd.2720
Wang, Q., Zhang, F., & Li, R. (2023). Revisiting the environmental kuznets curve hypothesis in 208 counties: The roles of trade openness, human capital, renewable energy and natural resource rent. Environmental Research, 216(Part 3), 114637. https://doi.org/10.1016/j.envres.2022.114637
Wang, W.-Z., Liu, L.-C., Liao, H., & Wei, Y.-M. (2021). Impacts of urbanization on carbon emissions: An empirical analysis from OECD countries. Energy Policy, 151, 112171. https://doi.org/10.1016/j.enpol.2021.112171
Xu, G., Zhou, Z., Jiao, L., & Zhao, R. (2020). Compact Urban Form and Expansion Pattern Slow Down the Decline in Urban Densities: A Global Perspective. Land Use Policy, 94, 104563. https://doi.org/10.1016/j.landusepol.2020.104563
Zafar, M. W., Mirza, F. M., Zaidi, S. A. H., & Hou, F. (2019). The nexus of renewable and nonrenewable energy consumption, trade openness, and CO2 emissions in the framework of EKC: evidence from emerging economies. Environmental Science and Pollution Research, 26, 15162–15173. https://doi.org/10.1007/s11356-019-04912-w
Zhang, N., Yu, K., & Chen, Z. (2017). How does urbanization affect carbon dioxide emissions? A cross-country panel data analysis. Energy Policy, 107, 678–687. https://doi.org/10.1016/j.enpol.2017.03.072
Zhang, S., Liu, X., & Bae, J. (2017). Does trade openness affect CO2 emissions: evidence from ten newly industrialized countries? Environmental Science and Pollution Research, 24, 17616–17625. https://doi.org/10.1007/s11356-017-9392-8
Downloads
Submitted
Accepted
Published
How to Cite
Issue
Section
License
Copyright (c) 2026 Fika Rizki Nandatari, Mahrus Lutfi Adi Kurniawan, Firsty Ramadhona Amalia Lubis, Danur Condro Guritno, Indanazulfa Qurrota A'yun
This work is licensed under a Creative Commons Attribution 4.0 International License.
