Determinants of energy consumption in selected ASEAN countries: New evidence from panel ARDL and wavelet coherence approaches

Energy consumption is central to economic growth, industrialization, and social progress in rapidly developing regions. This study examines the dynamic links between foreign direct investment (FDI), carbon dioxide (CO2) emissions, exchange rates (ER), income per capita (INC), and energy consumption in five ASEAN economies over 1985–2024, while allowing for regional spillover effects. A panel autoregressive distributed lag (ARDL) model is used to estimate short-run adjustments and long-run elasticities, and wavelet coherence is applied to map co-movement across time and frequency. Results indicate that FDI and CO2 emissions raise energy consumption in both the short and long run, consistent with energy-intensive investment-led expansion and environmental externalities from industrial activity. Exchange rates show a modest long-run association but significant short-run effects, implying that currency movements and trade conditions quickly transmit into energy demand. Income per capita significantly affects energy use only in the short run, suggesting that income shocks translate into temporary demand changes rather than a permanent shift in consumption. By integrating panel ARDL and wavelet coherence, the study offers a richer account of equilibrium and time-varying dynamics, informing policies that align investment attraction, energy planning, and decarbonization in ASEAN.