Exploring the asymmetric determinants of consumption and production-based CO2 emissions in China.

Abstract

Environmental pollution has intensified significantly in the last few decades. Policymakers have considered this issue due to its direct influence on human lives throughout the globe. This study explores the asymmetric determinants of consumption-based and production-based CO2 emissions for China, for time horizon 1990-2019. ARDL and NARDL regression approaches have been adopted for empirical investigation. The ARDL regression method reveals that GDP does not produce any impact on production-based and consumption-based CO2 emissions, while energy use contributes as an increasing determinant of consumption-based and production-based CO2 emissions in the long-run. The NARDL regression method reveals that a positive shock in GDP is beneficial for a decline of consumption-based CO2 emissions, while it does not reduce production-based CO2 emissions in the long-run. However, negative shock in GDP contributes as an increasing determinant of consumption-based CO2 emissions. Results also report that positive shock in energy use behaves as an increasing agent of consumption-based and production-based CO2 emissions in the long-run, while negative shock in energy use produces a decline in production-based CO2 emissions in the long-run. Thus, policymakers should adopt such demand and supply sides' management policies that contribute to controlling CO2 emissions.