New insights into an old issue: exploring the nexus between economic growth and CO2 emissions in China

Foreign waste ban and green development of Chinese manufacturing industry: Comprehensive evidence based on provincial data

Since the reform and opening up, imported solid wastes have pushed China's economic growth while also bringing about serious environmental problems. In this context, China has introduced a ban on "foreign waste" for imported solid waste. Based on the provincial panel data from 2010 to 2020, this paper calculates the Green Total Factor Productivity (GTFP) of the manufacturing industry to measure the level of green development of the manufacturing sector, and evaluates the comprehensive impact of the "foreign waste" ban on the green development of the manufacturing industry by using the continuous Difference-in-Differences method. The study finds that the foreign waste ban greatly promotes the greening of China's manufacturing sector, mechanism analysis shows that foreign waste ban stimulates innovation by innovation effects and increases production cost by cost effects, and the policy effect has heterogeneity as it is more prominent in coastal areas, areas with a lower proportion or a higher level of green development. This result suggests that the promotion of domestic solid waste recycling should be accompanied by further guidance on efficient factor mobility, with different measures based on regional heterogeneity.

Investigating the unparalleled effects of economic growth and high-quality economic development on energy insecurity in China: A provincial perspective

China has changed its focus from traditional high-speed economic growth to high-quality economic development (HQED) and the implementation of environmentally friendly practices. This transition can have parallel or unparallel impacts on energy insecurity (EIS). In this regards, HQED, inter Alia, is crucial in mitigating EIS and combating the energy crisis. Our study explores the impact of economic growth (EG) and HQED on EIS using the provincial panel data of China for the period 2011-2017. From the perspective of comparative analysis, the results reveal that HQED reduces EIS while EG increases it. The robustness checks indicate that industrial structure (IS) has a negative impact on EIS, whereas industrial structure upgrading (ISU) and green innovation (GI) have a positive influence. This implies that IS contributes to an increase in EIS, whereas ISU and GI result in a decrease in EIS. In addition, the analysis reveals that digital financial inclusion (DFI) exhibits a significant positive relation with EIS, albeit occasionally a negative but insignificant link. The policy implication is that the government should stimulate policies to promote HQED which reduces the EIS.

On the nexus between CO2 emissions and the air transportation sector in the European Union and Turkey: accessing evidence from wavelet coherence analysis

The coronavirus disease has had a devastating impact on the airline industry worldwide. However, the cancellation of flights has also enormously reduced CO2 emissions in the air. The present study empirically explores the environmental impact of the sectoral lockdown within the EU28 and Turkey by leveraging the wavelet coherence transform (WCT) technique. The results revealed that there is a positive correlation between the number of passengers carried and CO2 emissions. In the short run, during the pandemic, there is a strong positive linkage between the number of passengers carried and CO2 emissions, while in the long run, there are also positive and meaningful relationships between the number of passengers carried and CO2 emissions between 2014 and 2022. The result also indicates that, on a quarterly basis, there was a sharp decline in CO2 emissions caused by the airline industry during the period of 2020-2021. The reverse effect was also detected, which has empirically validated the hypothesis that, during the pandemic, pollution in the atmosphere has declined because of the cancellation of flights. This confirms the hypothesis that there is positive feedback causality between passengers carried and CO2 emissions. This finding has also been supported in the existing energy literature. These outcomes have implications for environmental sustainability targets in the EU and Turkey, as the recovery of international passenger traffic will proceed at a very close pace. More policy caveats are elucidated in the conclusion section.

Dynamic assessment of the impact of agricultural land use change and globalization on environmental quality in the tropical African Rainforest: evidence from the Congo Basin

The rising human demand for food has increased the pursuit for more agricultural land to feed the ever-growing human population. Although agriculture constitutes the cornerstone of most economies and serves as a vital source of foreign earnings to others, experts suggest that it emits a substantial amount of greenhouse gases into the atmosphere, thereby enhancing global warming. Furthermore, with the growing pace of globalization, less developed countries are witnessing economic growth with detrimental impacts on the environment. Inspired by the need to protect tropical rainforests and basins, the current research aims to assess the dynamic impacts of agricultural land use change (LALUC) and globalization (LGLO) on environmental quality (LCO2) in the Congo Basin while controlling for economic growth (LGDP), biomass energy consumption (LBIO), and urbanization (LURBN). Based on panel data from 1980 to 2018, this study utilized second-generation econometric methods including the cross-sectional Im, Peseran Shin (CIPS), Westerlund bootstrapped co-integration test, autoregressive distributive lag/pooled mean group (ARDL/PMG), and the Dumitrescu Hurlin (D-H) panel causality estimates. The outcome reveals a long-run equilibrium co-integrating association among the estimated variables, and LALUC, LBIO, and LURBN were found to reduce LCO2, while LGDP and LGLO increase LCO2. These findings imply the inverted U-shaped relationship between LALUC, LBIO, and LURBN is beneficial for environmental quality in the Congo Basin. Based on the findings, environmental quality and economic growth can be achieved instantaneously in this region by engaging in large-scale production of biomass energy. Therefore, policymakers and governments should promote renewable energy use and convey foreign funds towards its enhancement, while investments in agriculture should prioritize environmentally benign practices such as agroforestry.

Eco-innovations, green growth, and environmental taxes in EU countries: a panel quantile regression approach

The purpose of this study is to examine how environmental taxation, green growth, and eco-innovations contribute to a more sustainable environment. This study examines the influence of green growth, environmental taxes, and eco-innovations on carbon dioxide emissions in 26 environmentally responsive European Union (EU) countries from 2000 to 2020. The analysis was conducted using the second-generation panel unit root test, cross-sectional dependence, panel cointegration, and panel quantile regression. Theoretical and empirical research has demonstrated that both linear and non-linear green growth strategies are effective in reducing CO2 emissions. There is evidence that CO2 emissions can be reduced through the implementation of environmental taxes, eco-innovations, the use of renewable energy sources, and enhanced energy efficiency. In contrast, economic growth has a positive effect on carbon emissions, and its square term verifies the environmental Kuznets curve. Nevertheless, our research findings provide empirical support for the hypothesis that sustainable development contributes to the maintenance of stringent environmental standards. For the sampled countries, the study's findings have significant policy implications. These results encourage governments to prioritize green growth over traditional economic growth and to encourage eco-innovations in renewable energy technology.

Revisiting the relationship between business conditions, climate policy uncertainty, and environmental pollution: evidence from the USA

This paper aims to revisit the interdependency between business conditions, climate policy change, and the environmental pollution of the USA. Interestingly, our paper represents a completion to the existing literature on three levels at least. First, we propose to analyze this issue during normal periods and periods of turmoil, particularly the COVID-19 outbreak. To do so, contrary to previous studies that used economic growth, we employ the ADS index as a real-time business conditions measurement. Second, we employ a frequency approach, based on the continuous wavelet transform, allowing us to understand the nature of the relationship. Understanding whether the relationship holds in the short- or long-term is useful for policymakers in monitoring public policies to achieve CO2 emission reduction as well as to investors interested in high value-added projects. Our analysis shows that, during the last two decades, the relationship between business conditions as well as climate uncertainty index and CO2 emissions is observed during the long- and short-term, and driven through economic conditions. However, during the crisis periods, the effect is detected across various scales and the relationship is bi-directional. Our results have several practical implications for the US policymakers to consider when setting policies for fighting pollution emissions and environmental protection.

Evaluating the symmetric and asymmetric effects of fossil fuel energy consumption and international capital flows on environmental sustainability: a case of South Asia

South Asia is primarily affected by environmental degradation. As a result, it is worthwhile to explore the impact of international capital flows on the ecological sustainability of the South Asian region. There are many studies in the literature on the CO₂-remittances nexus, CO₂-FDI nexus, and CO₂-economic growth; however, no study has yet taken remittances and FDI into account in the symmetric and asymmetric model for the South Asian region. To address the research gap, this study investigates the effect of international capital flows, fossil fuel energy consumption, and economic growth on South Asian carbon emissions. This study examines the effect of fossil fuel energy consumption, remittances, foreign direct investment, and economic growth on the environmental sustainability of the South Asian region from 1975 to 2020. Autoregressive distributive lag (ARDL) and non-linear ARDL (NARDL) models are used to estimate the symmetrical and asymmetrical relationships among the variables. The findings of the ARDL models reveal that fossil fuel energy consumption and economic growth increase while remittances and FDI decrease carbon dioxide (CO₂) in the long run. According to the NARDL empirical findings, positive remittances and negative FDI shock reduce CO₂. Besides, the positive and negative fossil fuel energy consumption shock increases CO₂. Moreover, the positive (negative) economic growth shock increases (decreases) CO₂. The cumulative dynamic multipliers revealed the adjustment pattern to new long-run equilibria. The study recommends that policymakers regard remittances and FDI as policy instruments, particularly when developing long-term strategies and policies connected to environmental quality.

The role of renewable energy consumption on environmental degradation in EU countries: do institutional quality, technological innovation, and GDP matter?

In the face of climate change and environmental degradation, reducing emission of greenhouse gases has become a key factor for environmental sustainability. Therefore, the present research is intended to explore the roles of renewable energy consumption, institutional quality, technological innovation, and GDP on carbon dioxide emissions in the 14 EU countries. In doing so, this study employed novel method of moments quantile regression (MMQR) using annual data from 2000 to 2019. Also, a number of other estimators were applied for robustness check including the fully modified ordinary least square (FMOLS), the dynamic ordinary least squares (DOLS), and the fixed effect ordinary least square (FE-OLS). The empirical findings indicate that renewable energy consumption significantly reduces CO₂ emissions across all quantiles (0.1-0.9). Furthermore, institutional quality and technological innovation improve environmental quality in 0.1-0.7 quantiles, although GDP enhances carbon emissions significantly in all quantiles. In addition, the FMOLS, DOLS, and FE-OLS results confirmed the MMQR results. The outcomes of this study suggest insights for the policymakers to mitigate carbon emissions through promoting innovative technologies for environmental protection and investing more in the development of renewable energy.

Heterogeneous two-sided effects of different types of environmental regulations on carbon productivity in China

In the context of globalization, the importance of enhancing carbon productivity is becoming increasingly evident. The study is a continuation of previous studies on the relationship between environmental regulations and carbon productivity. Based on a dataset of 30 provinces in China from 2006 to 2018, the paper decomposes the two-sided effects of command-and-control and market-based environmental regulations on carbon productivity. First, empirical research shows that the average positive effect of command-and-control environmental regulation on carbon productivity is 0.0158, which is much less than the average of negative effect of 0.0697, highlighting mainly the negative effect on carbon productivity. Conversely, the positive effect of market-based environmental regulation on carbon productivity is 0.0691, much greater than the negative effect of 0.0038, which highlights the obvious positive impact characteristics. Overall, the net effect of command-and-control environmental regulation on carbon productivity is -0.0541, and net effect of market-based environmental regulation on carbon productivity is 0.0653. Second, the negative impact of command-and-control environmental regulations on carbon productivity underwent a "back-to-N" change process in 2006-2018, while the driving effect of market-based environmental regulation on carbon productivity increased continuously during the 2006-2018 period. Third, most of the regions with high negative effects of command-and-control environmental regulation on carbon productivity tend to be resource-intensive and carbon-intensive, while the positive effects of market-based environmental regulation on carbon productivity have no obvious geographical agglomeration characteristics. Fourth, the continuous improvement of regional development conditions is clearly conducive to the continuous reduction of the negative effects of command-and-control environmental regulation on carbon productivity, while the higher positive effects of market-based environmental regulation on carbon productivity at this stage need to meet different regional condition intervals.

Financial Institutional and Market Deepening, and Environmental Quality Nexus: A Case Study in G-11 Economies Using CS-ARDL

This study presents a new insight into the dynamic relationship between financial institutional deepening (FID), financial deepening, financial market deepening (FMD), foreign direct investment (FDI), economic growth (GDP), population, and carbon dioxide emissions (CO2e) in the G-11 economies by employing a cross-sectionally augmented autoregressive distributed lag (CS-ARDL) approach during 1990-2019. The outcomes from the CS-ARDL and dynamic common correlated effects mean group (DCCEMG) models shows that financial deepening, GDP, FDI, and population degraded environmental quality both in the short run and the long run. Contrary to this, FID and FMD improves environmental quality in these countries. The government should work to maximize financial institutions (access, depth, efficiency) and financial markets (access, depth, efficiency) to reduce the CO2e. A strong positive and in-phase correlation of CO2e with economic growth and population is observed for G-11 countries. These results suggest policy makers should further improve financial institutions by creating opportunities for their populations. Moreover, the governments of G-11 countries should revise their foreign direct investment policies and attention should be given to import efficient means of energy production.

Does political risk spur environmental issues in China?

China is one of the largest emitters of carbon dioxide (CO₂) emissions in the world. Therefore, it is essential to explore the determinants of CO₂ emissions in China. But previous studies so far have not examined how the political risk of this country can affect its CO₂ emissions due to the lack of a long-term dataset. Hence, this study aims to capture the effect of political risk on China's CO₂ emissions while controlling renewable energy consumption, technological innovation, and the economy's economic growth. We employ Bayer and Hanck cointegration, FMOLS, DOLS, CCR, and frequency domain causality tests to establish the relationship among the variables mentioned above. The outcome of the study reveals that political stability is an important predictor of environmental degradation in China. Moreover, political stability is helpful to lower CO₂ emissions, while technological innovation and renewable energy consumption can reduce CO₂ emissions, economic growth further deteriorates environmental quality by increasing its carbon emissions. Therefore, the present study recommends that policymakers in China should control political tension in the country to control CO₂ emissions and, at the same time, promote technological innovation and renewable energy consumption.

The role of green growth, green financing, and eco-friendly technology in achieving environmental quality: evidence from selected Asian economies

Many countries are trying to achieve carbon neutrality targets by using environment-friendly technology and green growth. Thus, this analysis effort to identify the key role of green growth in improving the environmental quality. This study investigates the impact of green growth, income, environmental taxes, environment-friendly technology, renewable energy, and financial development in the context of 12 Asian economies over the period of 1990 to 2018. This study used the method of cross-section - augmented autoregressive distributed lag (CS-ARDL) to find out the impact of green growth and growth (GDP) on environment quality with some plausible variables under the scheme of environmental Kuznets curve (EKC). The study employed the method of CS-ARDL and for robustness the augmented mean group (AMG) method to find out the impact of green growth and GDP growth on environment quality with some plausible variables under the scheme of EKC. The results of CS-ARDL concluded that CO₂ is significantly affected by GDP growth, green growth, and technological change in the context of Asian economies. The GDP square is inversely and the GDP growth is positively related to the CO₂, indicating the presence of inverted U-shaped EKC in this region. But the inverse relationship between green growth and green growth square and concave EKC is observed in Asian countries. The study used the Dumitrescu and Hurlin panel test to gauge the causality between the variables. This study suggested that policymakers should focus on transforming the country's energy system in ways that will reduce energy-related CO₂ emissions faster than previously expected.

Dynamics between carbon emission, imported cultural goods, human capital, income, and energy consumption: renewed evidence from panel VAR approach

Few studies have examined the link between the importation of cultural goods and carbon emission. With an emphasis on the driving forces of carbon emission, this paper constructs conventional panel vector autoregressive (PVAR) models to examine the dynamics between carbon emission, imported cultural goods, income, human capital, and energy consumption based on country-panel data of 158 countries or regions from 2004 to 2017. Through Granger causality tests, we find a unidirectional causality running from GDP per capita to energy consumption, from HDI to imported cultural goods, from imported cultural goods to carbon emission, and from imported cultural goods and energy consumption for Annex I countries. As for non-Annex-I countries, energy consumption is the Granger cause of GDP per capita, while HDI has a bidirectional causality with GDP per capita. Through impulse response functions, we find that energy consumption and GDP per capita have significantly positive impacts on carbon emission within the shorter period for non-Annex-I countries than for Annex-I countries. In the same pattern, imported cultural goods have significantly negative impacts on carbon emission. Our variance decomposition results showed that the largest variation in carbon emission can be explained by its own shock for both non-Annex-I countries and Annex-I countries, while the carbon emission of Annex-I countries showed a stronger path dependence than non-Annex-I countries.

The interrelationships among financial development, economic growth and environmental sustainability: evidence from Ghana

A well established and developed financial system encourages savings and investment which stimulates economic growth. However, the link between financial development and the environment is ambiguous. In general, the role that the environment plays in the finance-growth nexus has received less attention, to the best of our knowledge. Against this backdrop, this study aims to examine the interrelationships among economic growth, financial development and carbon dioxide emissions for Ghana over the period of 1971-2018. To correct for a possible endogeneity problem, the three-stage least-square (3SLS) technique was employed. The results revealed that there is a bidirectional relationship between financial development and economic growth; and a unidirectional relationship from financial development to carbon dioxide emission. However, carbon dioxide emission has a neutral effect on economic growth and financial development. Economic growth exhibits an inverted U-shaped relationship with carbon dioxide emission, confirming the existence of the environmental Kuznets curve hypothesis in Ghana. Policymakers should consider the critical roles of financial development in achieving environmentally friendly growth in Ghana.

Nonlinear impact of municipal solid waste recycling and energy efficiency on environmental performance and economic growth: evidence from non-parametric causality-in-quantiles

Waste recycling significantly contributes to reducing carbon emissions and other greenhouse gases, leading to enhanced environmental performance and safeguards natural resources. Therefore, this study examines municipal solid waste recycling and energy efficiency's impact on the environmental performance and economic well-being of the USA. Some studies have emphasized the usefulness of MSW and its indicators, but most of them are survey-based and illustrate the scientific process of disposing of waste. Hence, the study intends to analyze the connection among considered variables using the recently developed and advanced estimation procedure of nonparametric causality in quantile approach by analyzing the quarterly dataset for 1990(Q1) till 2018(Q4). Through this technique, we have examined the causal relationships in different quantiles. The causality-in-quantile outcome indicates the acceptance of the null hypothesis in different quantiles, especially at low and high tail quantiles, while at some quantiles, the null hypothesis rejection is highlighted. This study suggests valuable implications for future studies, government, environmentalists, and policymakers.

Carbon Emissions and Socioeconomic Drivers of Climate Change: Empirical Evidence from the Logarithmic Mean Divisia Index (LMDI) Base Model for China

The main objective of the present study was to examine the impact of socioeconomic factors on environmental degradation or preservation using the logarithmic mean disivia index (LMDI). The study used the latest data from thirty Chinese provinces from 2012 to 2020. Pooled mean group (PMG) results were estimated to determine the long-term and short-term impact of the aforementioned compound variables on carbon emissions. The study results revealed that population growth, per capita GDP growth, and fossil fuel-led energy consumption, positively impacted environmental degradation in China at the provincial level. However, clean energy intensity and a transition towards renewable energy in China are helping to reduce carbon emissions. Similarly, clean energy intensity is also helping to lower carbon emissions. The study proposed that at the provincial level, joint efforts were required to control environmental degradation in China. The positive impact of renewable energy intensity on carbon emissions encourages the transition from fossil fuels to clean energy sources for environmentally friendly growth.

Role of political risk to achieve carbon neutrality: Evidence from Brazil

The current research assesses the impact of political risk on carbon dioxide (CO₂) emissions in Brazil while controlling the role of financial development, GDP growth, trade openness, and technological innovation. In doing so, the quarterly dataset from 1990 to 2018 is utilized with Bayer and Hanck cointegration, dynamic ordinary least square (DOLS) and canonical correlation regression (CCR), and frequency-domain causality tests. The cointegration test revealed a long-run association amongst the variables of interest. Furthermore, the outcomes from the DOLS and CCR revealed that increasing financial development, technological innovation, trade openness, and real growth increase CO₂ emissions while a better political environment reduces environmental pollution.

Decoupling Analysis of Greenhouse Gas Emissions from Economic Growth: A Case Study of Tunisia

The study examined the impact of different factors on greenhouse gas (GHG) emissions, by applying the extended STIRPAT model and decoupling analysis for Tunisia for the period 1990–2018. Furthermore, the study utilizes Tapio decoupling model, and the Auto-Regressive Distributed Lag (ARDL) bounds test approach to examine the relationship between the variables of greenhouse gas (GHG) emissions, economic growth, energy consumption, urbanization, innovation, and trade openness. The findings validated an inverted U-shape relationship between GDP and GHG emissions. In addition, we find that the consumption of renewable energy contributes to the reduction of GHG emissions in the long run. The findings call authority for the adaption of the regulatory framework relating to energy management, energy efficiency and the development of renewable energies, as well as to initiate energy market reforms, implement mitigation strategies and encourage investments in clean energies.

New insight into examining the role of financial development in economic growth effect on a composite environmental quality index

The inclusion of an index, which can be the representative of environmental quality from different aspects, seems to be of paramount significance. This issue is a major challenging one in the economic-environmental literature. This study investigates the role of financial development in economic growth effect on the composite environmental quality index (CEQI) in two groups of selected Organization of the Petroleum Exporting Countries (OPEC) and Organization for Economic Co-operation and Development (OECD) countries. In this regard, System Generalized Method of Moment (SYS-GMM) is applied to fit the research models. According to the findings, in the selected OPEC countries, financial development reinforces negative impacts of economic growth on environmental quality. In the selected OECD countries, economic growth has negative effect on the environmental quality and financial development weakens this effect. The effect of financial development on the CEQI is respectively negative and positive in OPEC and OECD countries. Moreover, in both groups of selected countries, energy consumption and economic growth have a negative impact on the CEQI; nonetheless, trade openness has a positive effect. Accordingly, some policy suggestions and new recommendations are presented for future studies, which would contribute to the better implementation of economic-environmental policies. Graphical abstract.

The Effect of Energy Usage, Economic Growth, and Financial Development on CO2 Emission Management: An Analysis of OECD Countries with a High Environmental Performance Index

The environmental performance index was developed to protect public health, and to sustain and manage the ecological vitality that is a crucial factor in countries’ social and economic development. The increase in CO2 emissions has been threatening environmental and human health. The main objective of this study is to evaluate the impact of economic growth, energy consumption, energy management, the urban population, trade openness, and financial development on CO2 emissions in the OECD countries that have a high ranking in the environmental performance index by utilizing the panel data analysis method for the years spanning 1990–2014. This assessment finds positive relationships between economic growth, energy consumption, and the urban population, and CO2 emissions. Moreover, it is put forward that a negative and significant relationship between financial development and CO2 emissions exists. Despite displaying a similar negative correlation, the relationship between trade openness and CO2 emissions is insignificant. In the Dumitrescu-Hurlin panel causality test conducted, it was seen that a two-way causality is prevalent between energy consumption and CO2 emissions. In addition, interrelations where CO2 emissions cause trade openness, and the urban population is an explanatory variable of the former relationship, were discovered.

Linking Economic Growth, Urbanization, and Environmental Degradation in China: What Is the Role of Hydroelectricity Consumption?

Achieving environmental sustainability has become a global initiative whilst addressing climate change and its effects. Thus, this research re-assessed the EKC hypothesis in China and considered the effect of hydroelectricity use and urbanization, utilizing data from 1985 to 2019. The autoregressive distributed lag (ARDL) bounds testing method was utilized to assess long-run cointegration, which is reinforced by a structural break. The outcome of the ARDL bounds test confirmed cointegration among the series. Furthermore, the ARDL revealed that both economic growth and urbanization trigger environmental degradation while hydroelectricity improves the quality of the environment. The outcome of the ARDL also validated the EKC hypothesis for China. In addition, the study employed the novel gradual shift causality test to capture causal linkage among the series. The advantage of the gradual shift causality test is that it can capture gradual or smooth shifts and does not necessitate previous information of the number, form of structural break(s), or dates. The outcomes of the causality test revealed causal connections among the series of interest.

Do public-private partnerships in energy and renewable energy consumption matter for consumption-based carbon dioxide emissions in India?

The present study explores the effect of renewable energy consumption and public-private partnership investment in energy on consumption-based carbon dioxide emissions for India from 1990Q1 and 2015Q4 whilst controlling technology innovation and economic growth. The study employs the Maki cointegration, Bayer-Hanck cointegration, fully modified ordinary least squares, dynamic ordinary least squares, and frequency-domain causality tests to explore these dynamics. The outcomes of the present study reveal that (i) there is a long-run cointegration equation between consumption-based carbon dioxide emissions and its possible determinants; (ii) whilst renewable energy consumption is beneficial for lowering consumption-based carbon dioxide emissions, public-private partnership investment in energy makes a positive contribution to consumption-based carbon dioxide emissions in the long-run; and (iii) public-private partnership investment in energy and renewable energy consumption also significantly causes consumption-based carbon dioxide emissions at different frequency levels in India. The present study recommends that policymakers in India should apply a series of policies to discourage the use of non-renewable energy and raise the share of renewable energy in order to reduce consumption-based carbon dioxide emissions in the country. The present study also recommends that public-private partnership investment in renewable energy should increase to achieve cleaner production processes.

The Imperativeness of Environmental Quality in China Amidst Renewable Energy Consumption and Trade Openness

It is widely accepted that CO2 emissions are the primary cause of climate change and environmental destruction. China, the world’s biggest carbon emitter, is the subject of this research. Utilizing the wavelet tools (wavelet correlation, wavelet coherence, multiple wavelet coherence, and partial wavelet coherence), the present study intends to capture the time-frequency dependence between CO2 emissions and renewable energy, economic growth, trade openness, and energy usage in China between 1965 and 2019. The advantage of the wavelet tools is that they can differentiate between short, medium, and long-run dynamics over the period of study. Furthermore, the study utilized the gradual shift causality test to capture the causal interconnection between CO2 emissions and the regressors. The findings from Bayer and Hanck showed a long-run relationship among the variables of interest. Furthermore, the findings from the wavelet coherence test revealed a positive relationship between CO2 emissions and economic growth and energy usage at all frequencies. Although there is a weak negative relationship between renewable energy and CO2 emissions in the short run, there is no significant co-movement between CO2 emissions and trade openness. The outcomes of the partial and multiple wavelet coherence also give credence to the outcomes of the wavelet coherence test. Lastly, the gradual shift causality test revealed a one-way causality from energy usage and economic growth to CO2 emissions. Based on the findings, suitable policy suggestions were proposed.