Agric. Econ. - Czech, 2020, 66(4):183-192 | DOI: 10.17221/258/2019-AGRICECON

Analysis of carbon dioxide emissions, energy consumption, and economic growth in ChinaOriginal Paper

Abrham Tezera Gessesse, Ge He^*

Department of Agricultural Economics and Management, College of Management, Sichuan Agricultural University, China

This study examines the nexus of carbon dioxide (CO2) emissions, energy consumption (EC) and gross domestic products (GDP), using an Autoregressive Distributed Lag (ARDL) bounds test approach of co-integration and error-correction model (ECM) for the period 1971-2015. The aim of the research is to i) examine the relationship between CO2 and GDP as "cross-coupling, relative decoupling, or absolute decoupling," and validate the existence of the Environmental Kuznets Curve (EKC) hypothesis; ii) detect causality between CO2 emissions, EC, and GDP, and scrutinize their impacts. The ARDL results confirm a long-run and short-run co-integration relationship between the variables. The relationship between CO2 emissions and GDP is "relatively decoupling," and the EKC exists in China. Its CO2 emissions are more explained by EC and contribute twofold of GDP. In the long run, there was significant negative causality from CO2 emission and GDP to EC. This indicates Chinese economic development structure should be re-designed towards energy-saving and decarbonized economic structure. Moreover, the central and provincial governments of China should synchronize optimal energy utilization and green economic structure to mitigate environmental deterioration and climate change.

Keywords: autoregressive distributed lag; causality; co-integration; Environmental Kuznets Curve; error-correction model

Published: April 30, 2020  Show citation