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Achieving environmental sustainability is a global priority, requiring economies to adopt innovative strategies for renewable energy transition. This study examines the nonlinear economic determinants of Malaysia’s renewable energy adoption, addressing a critical gap in understanding how investment, technology, and trade openness influence energy transition across different economic regimes. Using quarterly data (1990–2022), we employ Smooth Transition Regression (STR) and Threshold Regression Model (TRM) to capture regime-dependent effects of foreign direct investment (FDI), public-private partnerships (PPPE), technological innovation (ICT), economic growth (GDP), and trade openness (TRD). The results confirm that FDI and PPPE significantly drive renewable energy adoption, but their impact varies across economic thresholds. While ICT enhances energy efficiency, its influence is nonlinear, strengthening at higher economic levels. The study also supports the Environmental Kuznets Curve (EKC) hypothesis, showing that GDP initially hinders but later accelerates renewable energy adoption. However, TRD negatively impacts renewable energy expansion, suggesting that Malaysia’s current trade structure reinforces fossil fuel dependence. By integrating nonlinear modelling approaches, this study provides new empirical evidence on the threshold-driven nature of energy transition, offering policy insights for optimizing investment strategies, technology diffusion, and trade reforms to accelerate Malaysia’s clean energy future.
Gyamfi et al. (Tue,) studied this question.