Examining the Linkages Between Remittances and Electricity Consumption in Shaping Energy Security in the Philippines

Abstract

Energy security is widely recognised to be critical for sustainable development. Despite being a significant recipient of remittances in the Asia-Pacific region and making progress towards improving access to electricity, energy security challenges continue to be a major concern for policymakers in the Philippines. The main goal of this paper is to investigate empirically the effects of remittances on electricity consumption in Philippines using an Autoregressive Distributed Lag modelling approach using annual time series data from 1977 to 2022. The results reveal a stable cointegrating relationship between remittances, real income, financial development, and electricity consumption. We find that an increase in economic growth, financial development, and remittances tends to stimulate electricity consumption both in the long run and short run. The findings withstand robustness checks and assist policymakers in better understanding the remittances-electricity consumption nexus. These insights underscore the importance of policy reforms to encourage remittances-dependent households towards clean energy adoption and efficiency initiatives. Moreover, financial sector reforms are essential to boost efficiency and effectively facilitate investment in renewable and clean energy infrastructure projects to address existing energy security challenges.