Vol. 1 No. 2 (2024): December

This study dynamically examines the impact of energy price changes on green infrastructure investment in Southeast Asia, focusing on Indonesia and Malaysia over the period 2004–2023. The research aims to distinguish short-run and long-run investment responses to fossil energy price fluctuations while controlling for economic growth, green energy policies, and foreign direct investment. An Error Correction Model (ECM) is employed to capture both long-term equilibrium relationships and short-term adjustment dynamics among variables. The results reveal strong evidence of cointegration, indicating a stable long-run relationship between energy prices and green infrastructure investment. ECM estimates show that rising energy prices negatively affect green investment in the short run due to increased cost pressures and uncertainty, but exert a positive influence in the long run by enhancing the relative competitiveness of renewable energy. Economic growth is also found to significantly promote green infrastructure investment. These findings highlight the importance of macroeconomic stability and consistent energy policies in accelerating sustainable energy transitions in Southeast Asia.