Examining the links among economic growth, energy consumption, and CO2 emission with linear and nonlinear causality tests

Abstract

Understanding the causal relationships among economic growth, energy consumption, and CO2 emission is important for formulating energy conservation and emission reduction policies. In this paper, we explore the causal relationships among economic growth, energy consumption, and CO2 emission in China during 1978–2012 by using both the linear and nonlinear causality tests. The obtained results show that the links examined by the linear and nonlinear causality tests are not all same. Both linear and nonlinear causality tests indicate a unidirectional causality from CO2 emission to GDP and a bi-directional causality between energy consumption and CO2 emission. Linear causality test indicates a unidirectional causality from energy consumption to GDP, while nonlinear causality test indicates a unidirectional causality from GDP to energy consumption. Finally, policy recommendations are proposed for achieving the target of coordinated, sustainable development of China.