Has China's coal consumption actually reached its peak? National and regional analysis considering cross-sectional dependence and heterogeneity

Abstract

To investigate whether China's coal consumption has actually peaked, this study tests the national and regional coal Kuznets curve (CKC) hypothesis by using a panel dataset of 30 provinces covering 2000 to 2016. To fully capture the trends of coal consumption at the national, regional, and provincial levels, this study proposes a novel regional division method based on coal dependence and economic level. Considering the potential cross-sectional dependence and slope homogeneity, the newly developed methods allowing for heterogeneous slope coefficients are employed. The whole panel and subpanel results validate the CKC hypothesis for China, and province-specific results are mixed. The subpanel results reveal that only in the coal-dependent developing region has the peak of coal consumption not been reached, and for other regions, coal consumption displays a downward trend along with gross domestic product (GDP) increases. Furthermore, the province-specific results suggest that coal consumption will continue to increase slightly in certain provinces. This study implies that to reduce coal consumption, the coal-dependent developing region and provinces with a future turning point should act with great urgency to achieve a balance of economic growth and environmental responsibility. In addition, policymakers formulating coal consumption reduction policy in China must consider the remarkable differences across regions and provinces.