Studying the impact of investments in critical minerals and energy transition in transportation sector in Asia

Abstract

Using the CUP-BC estimation technique, this study explores Foreign Direct Investment (FDI) in critical minerals and its impact on fuel consumption in the transportation sector across nine ASEAN countries from 1995 to 2022. Results indicate that a 1% increase in FDI in critical minerals is associated with a 0.54% reduction in fuel consumption. This underscores the role of minerals like lithium, cobalt, and nickel in advancing energy transition, particularly in electric vehicle (EV) battery production. Urbanization correlates with a 0.16% increase in fuel use, while higher income levels associate with a 0.08% rise. Investments in ICT and renewable energy deployment reduce fuel consumption, highlighting sustainable transport initiatives. The study recommends ASEAN prioritize FDI in critical minerals, bolster domestic capabilities, and develop infrastructure to support EV adoption and sustainable transport.