Dutch disease perspective of energy sector: Natural resources and energy sector nexus with the role of renewable energy consumption

Abstract

The issue of climate change has fascinated consideration from policy makers in recent years. Energy efficiency is a crucial solution to climate change due to its ability to reduce the amount of energy needed to produce goods by transforming the energy systems. Currently, China is the top energy user in the globe. As the country continues to experience rapid economic growth and industrialization, its demand for energy continues to increase, leading to concerns about energy efficiency. Natural resources have traditionally been the main sources of energy for many countries, including China. The availability of excessive natural resource rents might, in most cases, be beneficial to the shift towards renewable energy. This study explores the effect that natural resource rents on the energy efficiency of China over the period of 1990–2021. This study helps formulate efficient energy policies and strategies by investigating the linkage between resource rents and energy efficiency in China. Using quantile regression approach, the findings of this study give insightful information regarding the connection between natural resource rents and energy efficiency in China. The results show that an increase in forest rents improves energy efficiency. On the contrary, natural gas rents, GDP and renewable energies worsen energy efficiency in China. Based on the results, this study recommends that policies should priorities sustainable forest management practices, including afforestation, reforestation, and conservation measures.