Abstract

China is the largest CO2 emitter in the world, and it shared 28% of the global CO2 emissions in 2017. According to the Paris Agreement, it is estimated that China’s CO2 emissions will reach its peak by 2030. However, whether or not the CO2 emissions in China will rise again from its peak is still unknown. If the emission level continues to increase, the Chinese policymakers might have to introduce a severe CO2 reduction policy. The aim of this paper is to conduct an empirical analysis on the long-standing relationship between CO2 emissions and income while controlling energy consumption, trade openness, and urbanization. The autoregressive distributed lag (ARDL) model and the bounds test were adopted in evaluating the validity of the Environmental Kuznets Curve (EKC) hypothesis. The quantile regression was also used as an inference approach. The study reveals two major findings: first, instead of the conventional U-shaped EKC hypothesis, there is the N-shaped relationship between CO2 emissions and real gross domestic product (GDP) per capita in the long run. Second, a positive effect of energy consumption and a negative effect of urbanization on CO2 emissions, in the long run, are also estimated. Quantitatively, if energy consumption rises by 1%, then CO2 emissions will increase by 0.9% in the long run. Therefore, the findings suggest that a breakthrough, in terms of policymaking and energy innovation under China’s specific socioeconomic and political circumstances, are required for future decades.

Highlights

  • Nowadays, rapid environmental degradation and modern infrastructure development are causing critical challenges to human life (Aguila 2020)

  • 1%, CO2 emissions will increase by 0.9% in the long run

  • The bounds test is adopted for cointegration to estimate the long run relationship between CO2 emissions and other variables

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Summary

Introduction

Rapid environmental degradation and modern infrastructure development are causing critical challenges to human life (Aguila 2020). GHG production is considered the main factor that influences carbon dioxide (CO2 ) emissions (Abeydeera et al 2019). In order to control CO2 emissions and other pollutants, there has been greater concern in China for more efficient environmental regulations, energy innovation, and multilateral environmental agreements. China’s 13th five-year plan, to promote the reduction of its gross domestic product (GDP) per unit of energy consumption by 15% by 2020, as well as the depletion of its GDP per unit of CO2 emissions by at least 40% by 2020, is compared to the levels in 2015. According to the Paris Agreement, China promised to reach its peak CO2 emissions no later than 2030. There is a need for a more thorough study on the output-emission nexus in China as the guidebook for policymakers to adopt appropriate measures and achieve these targets

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