Revisiting the environmental Kuznets curve hypothesis in the context of renewable and non-renewable energy in China

Abstract

This research paper attempts to determine the effect of fossil fuel, renewable energy, and economic growth on carbon dioxide emissions and revisits China's Environmental Kuznets curve (EKC) hypothesis. The time series analysis will be performed for the years 1990 to 2020. To begin, Augmented Dickey-Fuller (ADF) and Phillips Perron (PP) tests will be performed to verify the series' stationarity. Second, the cointegration test will be utilized to determine the validity of a cointegration vector before performing the Fully Modified Least Square approach to conduct long- and short-term estimation. The empirical analysis illustrates that renewable energy negatively and significantly affects short- and long-run carbon dioxide emissions. However, fossil fuel consumption only positively and significantly affects carbon dioxide emissions in the short run. The empirical evidence supports the Environment Kuznets Curve's hypothesis in China. Fossil fuel consumption has a considerably higher effect on carbon dioxide emissions than renewable energy. To avoid ecological damage in China, authorities must pay more consideration to encouraging the use of energy from renewable sources. This demonstrates that China's overall environmental performance first deteriorates before gradually improving with economic growth.