The relationship between renewable energy consumption, carbon emissions, output, and export in industrial and agricultural sectors: evidence from China.

Abstract

This paper examines the long-term and short-term relationships between renewable energy consumption, output and export, and CO2 emissions in China over the period 1990–2020 from the perspective of industry and agriculture using econometric methods. The results of the study found that there is a long-run relationship and there is a causality between these variables, indicating that renewable energy consumption, output, and export are related to CO2 emissions. Specifically, from a long-term perspective, the results of co-integration and causality reveal that there is a two-way causal relationship between renewable energy consumption, output, export, and CO2 emissions, supporting the feedback hypothesis; that is, output and export have an adverse impact on the environment, while renewable energy consumption has a favorable impact on the environment. In the short term, there is a direct or indirect one-way causal relationship between export, CO2 emissions, and renewable energy consumption, which supports the growth hypothesis. The impulse response analysis has further verified the causality test results and supported this hypothesis. However, there is a strong negative correlation between industrial and agricultural export and renewable energy consumption, which will cause the use of renewable energy to fail to meet the peak demand for industrial and agricultural export in the short term. Conversely, large amounts of fossil fuels will be consumed to meet output and export demand. Therefore, on the road to social, economic, and environmental sustainability, it is necessary to consider the impact of economic growth and energy consumption (renewable and non-renewable energy) of related industries on CO2 emissions, which also provides a strong basis for the development and reduction of China’s renewable energy and the long-term implementation of the emission control policy.