Abstract
This paper empirically investigates the interactions among CO2 emissions, economic growth, and three selected types of fossil energy consumption (coal, gas, and oil) using time series data from China over the period 1965–2015. Classic econometric analysis technologies including the Johansen cointegration test, the vector error correction model (VECM), and the Granger causality test based on VECM are employed to meet our objectives, and the presence of breaks in the data is also considered. Cointegration test result supports the existence of a long-run equilibrium relationship among the five variables, and the error correction mechanisms of the system involving the five variables are proven to be effective by VECM. Additionally, the Granger causality test based on VECM reveals that the bidirectional causalities between GDP and coal consumption, between GDP and gas consumption, and between coal consumption and CO2 emissions and unidirectional causalities running from GDP and oil consumption to CO2 emissions, from GDP to oil consumption, and from coal consumption to oil and gas consumption are found. Furthermore, several policy implications are proposed in the final section of this paper based on the empirical results.
Highlights
Energy is the cornerstone of economic development, and an important strategic resource for a country
The stationarity of the data we adopted is examined via unit root test, and the Johansen cointegration test is employed to verify the existence of the cointegrating relationship among the variables
(2) The results of the Granger causality test support that unidirectional causalities running from GDP and oil consumption to CO2 emissions are found, which reveals that economic growth and oil consumption have significant and positive impacts on CO2 emissions
Summary
Energy is the cornerstone of economic development, and an important strategic resource for a country. The last several decades have witnessed great achievements in the economic development and rapid growth of energy consumption in China. China has become the largest energy consumer, with the proportion of the world’s total energy consumption attributed to China having grown from 3.53% to 23.40% during the period 1965–2015. The excessive energy consumption has brought dramatic increases in CO2 emissions. With the further increases in the rate of global warming, it has become a mandatory requirement for China’s economic development to control CO2 emissions. China is gradually entering a new economic normality with a moderate or slow economic growth rate rather than the past rapid one, indicating that changing the past energy-dependent development mode is pressing
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