Nexus among economic growth, carbon emissions, and renewable and non-renewable energy in China.

Abstract

Due to the significant changes of economic growth rate, energy structure, and energy efficiency in China, whether energy policies should be adjusted is worthy of attention. This paper employs ARDL-ECM and Toda-Yamamoto causality to investigate the relationship between renewable energy, non-renewable energy, carbon emissions, economic growth, gross fixed capital formation, and urban population spanning the period 1960-2019 in China. The examined results of ARDL-ECM indicate that renewable energy both have positive impact on GDP in the short term and long term but non-renewable energy only have positive impact on GDP in the short term. Additionally, based on Toda-Yamamoto causality, this paper finds a unidirectional Granger causality running from economic growth to energy consumption and from energy consumption to carbon emissions. And there is a unidirectional Granger causality running from GDP to non-renewable energy consumption. It is worth noting that renewable energy consumption and economic growth have positive bidirectional influence on each other. The study findings suggest that stricter energy conservation and pollution emission reduction policy should be implemented and renewable energy should be applied on a larger scale in order to achieve the goal of sustainable economic development.