Study On The Relations Among CO₂Emissions, Energy Consumption And Economic Growth And Impact Factors In China

Greenhouse gas emissions cause global warming problem which is paid more and more attention. Man-made carbon dioxide emissions due to fossil fuel burning, cement, lime, steel and other industrial processes is the main incentive in all greenhouse gases. China, as the largest developing country in the world in the past30years, its economy has achieved rapid development. However, the rapid development has depended on high consumption of energy consumption which attributed to large amounts of greenhouse gas emissions.What’s more, China’s per capita income is still at a lower level. China’s per capita GDP ranked91in2010. So for a long period of time, China will continue to put economic development on the prime location. Based on the above, the question now is whether China’s economic growth will inevitably lead to more emissions; or there exists an inverted U-shaped relationship between emissions and economic growth? Whether the reducing of energy consumption in order to reduce carbon dioxide emissions will influent and constraint the economic growth or not? In addition to energy consumption, how other factors affect carbon dioxide emissions? This paper studies the relationship among carbon dioxide emissions, economic growth and energy consumptions of China. What’ more, the paper set empirical model to examine the influencing factors based on the relationship among the three aspects, which expect to provide a reference for the above questions.This paper summarizes a literature review of relevant research, followed by a two-part empirical research. In the first part, this paper examines the long-term and short-term dynamic relationships and causal relationships among carbon dioxide emissions, economic growth and energy consumption of China in a multivariate cointegration and endogenous analytical framework using autoregressive distributed lag model (ARDL) and Granger causality test. The results provide evidence for the existence of a fairly robust long-run equilibrium relationship between the variables. In the short-run, there exists a bi-directional causality between carbon dioxide emissions and energy consumption. This study also establishes unidirectional short-run causality running from economic growth to carbon dioxide emissions and to energy consumption. In the long run, there exists the unidirectional causality running from energy consumption, economic growth to carbon dioxide emissions and the unidirectional causality running from carbon dioxide emissions, economic growth to energy consumption. The ARDL estimates the coefficient of elasticity of carbon dioxide emissions to each explanatory variable and the results provide evidence for the Environmental Kuznets Curve (EKC) hypothesis. The second part of the empirical analysis set a simultaneous equations model on the basis of the analysis of the first part, including pollution equation, output equation and energy equation, using GMM estimation method for the simultaneous equation group to make further analysis of the factors affecting carbon dioxide emissions, economic growth and energy consumption of China. The results are as the following:among the endogenous variables, there exists an inverted U-shaped relationship between carbon dioxide emissions and economic growth. The impact of carbon dioxide emissions to economic growth is not significant. Carbon dioxide emissions and economic growth have a positive impact on energy consumption. To the exogenous variables, technological progress, industrial structure optimization will reduce carbon dioxide emissions, while the increase of trade openness will increase carbon dioxide emissions. Technological progress, the stock of physical capital and human capital can increase the output level of the national economy while the impact of labor input is not significant. Industrial structure optimization reduces energy consumption, and foreign trade leads to the increase in energy consumptions. EKC comparative static analysis is followed which takes technological progress, the stock of physical capital for example to further examine the specific mechanism of the variable impacting carbon dioxide emissions and economic growth, which points to practical significance of the EKC. Finally, some policy implications of the empirical results have been proposed based on the above analysis.