Clarifying the relationship among green investment, clean energy consumption, carbon emissions, and economic growth: a provincial panel analysis of China.

Yuanyuan Wan,Ni Sheng

doi:10.1007/s11356-021-16170-w

Abstract

As a financial activity with the main purpose of ecological protection and environmental governance, green investment has important practical significance for promoting sustainable economic development. Previous studies have not addressed the relationship between green investment, clean energy consumption, carbon emissions, and economic growth. We use panel data from 30 provinces and cities in China from 2003 to 2017 to build a simultaneous equation model, which can evaluate the nonlinear relationship and avoid the endogeneity of the model. The research results show that, firstly, green investment has a significant positive impact on clean energy consumption and economic growth. However, it has no significant effect on carbon dioxide emissions. Second, the curve of clean energy consumption and per capita GDP conforms to the positive U-shaped characteristic, while the curve of carbon emissions and per capita GDP conforms to the EKC curve, meeting the inverted U-shaped characteristic. And the inflection point of clean energy use occurred earlier than the inflection point of CO2 emissions. When per capita GDP is greater than 105,735.93 (RMB), the use of clean energy will increase, and carbon dioxide emissions will decrease, thereby achieving a win-win situation for the environment and the economy. Finally, according to the survey results, it is suggested that green investment is an effective means to encourage clean energy consumption and economic growth.

Highlights

Since China’s reform and “opening up” period, the country's economy has developed rapidly, and problems such as shortages of energy resources and increasing environmental pollution have followed (Zhou et al, 2020)
Column (2): in the CO2 equation, clean energy use and economic growth will increase CO2 emissions, and green investment has no significant impact on CO2 emissions
Based on the environmental Kuznets curve theory and economic growth theory, this study used panel data from 30 provinces and cities in China from 2003 to 2017 and a simultaneous equation model to examine the impact of green investment on clean energy consumption and economic growth

Summary

Introduction

Since China’s reform and “opening up” period, the country's economy has developed rapidly, and problems such as shortages of energy resources and increasing environmental pollution have followed (Zhou et al, 2020). Energy is the foundation and driving force of a country's economic and social development. Changes in energy consumption structure directly affect a country's economic structure, which in turn affects the green, healthy, stable, and long-term development of the economy and society. China’s energy supply is still dominated by natural fossil fuels such as coal, oil, and natural gas, and energy development and utilization have almost always occurred with a low efficiency and high consumption (Ivanovski et al, 2021; Cai et al, 2018). The development of clean energy is generally regarded as one of the most important steps in mitigating pollutant emissions and climate change (Dong et al, 2018; York and Bell, 2019).

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Conclusion