Growth, energy mix, finance, and PPPs: Long-run drivers of CO 2 emissions in the Philippines

This paper estimates the long-run relationship between total CO2 emissions and four policy-relevant drivers in the Philippines – income (GDP per capita), renewable energy share, financial depth (domestic credit to the private sector), and public – private partnership investment in energy (PPPIE) – using annual data for 1990–2021. Cointegration-based time-series methods are employed, with Dynamic OLS (DOLS) providing baseline long-run elasticities; a centered-income quadratic probing Environmental Kuznets Curve (EKC) nonlinearity; and ARDL bounds testing offering robustness and error-correction dynamics. Johansen tests indicate cointegration among the variables. The DOLS results show that income remains a dominant scale driver of emissions, while the composition of energy supply matters for mitigation: increases in the renewable share are associated with lower CO2 emissions in the long-run. Financial depth is positively related to emissions, consistent with credit predominantly financing carbon-intensive activities during the sample period. Aggregate PPPIE exhibits no clear baseline effect, reflecting the heterogenous composition of investment portfolios. The EKC turning point lies below the observed income range, implying no evidence of automatic decoupling in the Philippine context. ARDL estimates corroborate the long-run relationships and indicate statistically significant adjustment toward equilibrium. Overall, the findings suggest that decarbonization in the Philippines depends less on income growth itself than on deliberate shifts in energy composition, financial allocation, and investment design, highlighting the importance of renewable integration, sustainable finance, and targeted PPP frameworks.