Looking for asymmetries and nonlinearities: The nexus between renewable energy and environmental degradation in the Northwestern provinces of China

Abstract

Recent industrial surge in the Northwestern provinces of China resulted in substantial energy consumption and adverse effect on the environment. Despite being less established, the Northwestern region of China has strategic importance and the use of renewable energy can potentially promote sustainable development in this region. Considering this aspect, this study aims to investigate the impact of renewable energy on environmental pollution in five Northwestern provinces of China during 1995–2014. This study uses the Nonlinear Autoregressive Distributed Lag bounds testing approach with the structural break unit root and other specifications tests. The results indicate that renewable energy positive shock has an adverse impact on the CO2 emissions of the Northwestern provinces of China. The effect of renewable energy use varies in five provinces, i.e. it is more significant in Gansu, Qinghai and Xinjiang than in Ningxia and Shaanxi. However, reduction in renewable energy consumption leads to higher level of CO2 emissions and this effect is more significant for Ningxia and Shaanxi in the long run. Furthermore, the positive shockwaves in nonrenewable energy, GDP and transportation are associated with environmental pollution in these provinces both in short run and long run. Nevertheless, the impact of negative shockwaves in nonrenewable energy consumption on environmental pollution is more significant than economic development for all provinces. Our findings suggest that: cutting down fossil fuels use can substantially improve environmental quality in these provinces; depending on the provincial geographies and government strategies, the intensity of positive impact of renewable energy towards CO2 emissions reduction differs among five provinces. Likewise, renewable energy development has abundant potential to increase the economic and ecological sustainability in the Northwestern provinces of China in the long run.