Investigating the EKC hypothesis with renewable energy consumption, human capital, globalization and trade openness for China: Evidence from augmented ARDL approach with a structural break

Abstract

China is the most polluted country in the world, facing the challenges of increased CO2 emissions and its ecological footprint. In order for China to achieve sustainable growth, it must identify factors that reduce environmental pollution and take essential measures before it is too late. To this end, this study empirically examines the ecological outcomes of income, human capital, globalization, renewable energy consumption, and trade openness for China within the framework of the environmental Kuznets curve (EKC) hypothesis. The paper employs the recently developed augmented ARDL approach in the presence of one structural break to investigate annual time series data during the period 1980–2016. The findings reveal that the EKC hypothesis does not hold for China, and a U-shaped quadratic relationship between environmental pollution and income level has been determined for both CO2 emissions and ecological footprint. The results also suggest that globalization, trade openness, and income drive environmental pollution while increasing human capital reduces the ecological footprint in the long-term. No effects were found for renewable energy consumption. The study highlights that human capital plays a key role in reducing environmental degradation in China, while renewable energy is not sufficient to meet environmental requirements.