Investigating environmental Kuznets curve from an energy intensity perspective: Empirical evidence from China

Abstract

This study pioneers investigating the environmental Kuznets curve (EKC) hypothesis and its possible regional differential characteristics in China. Based on 2003–2017 years of provincial panel data, this research employs panel smooth transition auto regression (PSTR) model to analyze the impact of income levels on environmental pollution and identify the EKC threshold of energy intensity. Then, 30 Chinese provinces were categorized by energy intensity to examine the inter-provincial and interregional differences in the EKC threshold of energy intensity, rather than the traditional threshold of income. The results indicate that China's pollution emissions and energy intensities show a stepwise decreasing pattern from the western region to the eastern region. In addition, the impact of income levels on pollution emissions is non-linear, and the critical value of energy intensity is 0.9168 between the high- and low regimes. An inverted U-shaped environmental Kuznets curve is accepted for energy intensity, with 0.7670 as its threshold value. When the energy intensity is higher (lower) than the threshold value, the income elasticity of pollution emission is positive (negative). The more developed provinces and municipalities mainly in the eastern region are proved to exceed the threshold than the provinces in the central and western regions within the sample period. Given these findings, this study further divides China's provinces into eco-friendly, low-pollution, and high-pollution provinces, and accordingly, the most important policy recommendations were discussed for policy-makers and researchers. This research can provide a new insight to investigate countries with unbalanced development levels within and a reference for environmental governance policies in sub-regions.