مصرف انرژی، انتشار کربن، و رشد اقتصادی در چین

This paper investigates the existence and direction of Granger causality between economic growth, energy consumption, and carbon emissions in China, applying a multivariate model of economic growth, energy use, carbon emissions, capital and urban population. Empirical results for China over the period 1960–2007 suggest a unidirectional Granger causality running from GDP to energy consumption, and a unidirectional Granger causality running from energy consumption to carbon emissions in the long run. Evidence shows that neither carbon emissions nor energy consumption leads economic growth. Therefore, the government of China can purse conservative energy policy and carbon emissions reduction policy in the long run without impeding economic growth.

Global warming has been one of the most important environmental problems of our ages. The ever increasing amount of carbon dioxide (CO2), the dominant contributor to the greenhouse effect, seems to be aggravating this problem. Academics and practitioner alike have been debating about reducing greenhouse gas (GHG) emissions to alleviate global warming. There seems to be basically three research strands in literature on the relationship between economic growth and environmental pollutants. The first strand focuses on the environmental pollutants and economic growth nexus. It is closely related to testing the validity of the so-called environmental Kuznets curve (EKC) hypothesis, which postulates an inverted U-shaped relationship between the level of environmental degradation and income growth. That is to say, environmental degradation increases with per capita income during the early stages of economic growth, and then declines with per capita income after arriving at a threshold. Ever since the original empirical study of Grossman and Krueger (1991), an increasing body of literature has tested the economic growth and environmental pollution nexus.1 However, the empirical results appear to be controversial. The EKC model is severely criticized for lack of feedback from environmental pollutants to economic output as income is assumed to be an exogenous variable (see Arrow et al., 1995, Stern, 2004 and Hung and Shaw, 2002; among others). Hill and Magnani (2002), Stern (2004), and Dinda (2004) provided extensive reviews of this EKC research. The second strand concentrates on the link between economic output and energy consumption, since the emissions are mainly caused by burning fossil fuels. Following the seminal study of Kraft and Kraft (1978), an increasing number of studies has assessed the empirical evidence employing Granger causality and cointegration model. The earlier studies mostly apply a bivariate model and fail to get consensus results. The bivariate model is criticized in many econometric issues, especially the omitted variables bias. Stern (1993) argued that bivariate tests may fail to detect causality because of the substitution effects that may occur between energy and other inputs. Employing a multivariate model with energy consumption, gross domestic product (GDP), capital, and labor force, Stern (1993) found Granger causality running from energy use to GDP for the USA. Following Stern (1993), a considerable number of studies2 has tested the causal relationship between the energy consumption and economic output in a multivariate context. However, the multivariate studies also produce conflicting results. Huang et al. (2008) provided a good review on the empirical results from causality tests. An assessment of the existing literature indicates that most studies focus on the nexus of output-energy or output-pollution. Only recently, a combined approach of those two methods has emerged which is implied to investigate the inter-temporal links in the energy–environment–income nexus. Appling a multivariate model with income, energy consumption, carbon emissions, gross fixed capital formation, and labor force, Soytas et al. (2007) found no Granger causality between income and carbon emissions, and no Granger causality between energy use and income in the US. But energy consumption Granger causes the carbon emissions in the long run. Using the same approaches and variables as that of Soytas et al. (2007), Soytas and Sari (2009) found the same link between income and carbon emissions in Turkey. However, the carbon emissions Granger cause the energy consumption in the long run. The lack of a long run Granger causality between income and carbon emissions provides evidence that both the US and Turkey reduce carbon emissions without forgoing economic growth. Applying the bounds testing to cointegration procedure in a multivariate model with carbon emissions, energy use, income, and foreign trade, Halicioglu (2009) found that there is a bi-directional Granger causality (both in short and long run) between the carbon emissions and income in Turkey. This result is conflicting with that of Soytas and Sari (2009). Ang (2008) found that output growth Granger causes energy consumption in Malaysia. However, weak evidence of causality running from carbon emissions to income in the long run, but no feedback link is observed. In the first two research strands, there are even a more limited number of examples that examine the nexus between economic growth and environmental degradation in China. Song et al. (2008) investigated the relationship between environmental pollution and economic growth in China based on the EKC hypothesis using Chinese provincial data. It is found that there is a long run cointegration relationship between per capita emissions of three pollutants (waste gas, waste water, and solid wastes) and per capita GDP. Furthermore, the results showed that all three pollutants are inverse U-shaped in China. Soytas and Sari (2006) found that there is no Granger causality between income and energy use in China. The empirical study of Yuan et al. (2008) showed there is a bilateral Granger causality between GDP and energy use in the long run, and unidirectional Granger causality from GDP to energy use in the short run in China. The causality results of previous studies for China are summarized in Appendix A. The empirical studies using the same country data also failed to achieve unanimous conclusions. To the best of our knowledge, no study has been conducted to examine the relationship between economic growth, energy use, and pollutant emissions under the same framework in China. As such, this is one of our major contributions. The choice of China is also motivated by the fact that China has been the second largest energy consumer and energy-related CO2 emitter in the world. As a developing country, China is one of the highest growth economies in the world, and it has experienced a significant rise in energy consumption and carbon emissions in recent decades. During the period 1980–2007, the average annual growth rate of GDP is more than 9%, the primary energy consumption increased by about 340%, and carbon dioxide emissions sharply increased by about 352%. The Kyoto Protocol is severely criticized for lack of inclusion of emission reduction obligations for developing countries, as Pittel and Rübbelke (2008) points out: “Due to the rising importance of developing countries' contribution to climate change, their participation in an international problem–solution approach becomes crucial.”3 China should make effective policies in reducing CO2 emissions to alleviate global warming, although its per capita emissions are very low. Therefore, we examine the inter-temporal relationship in income–energy–environment nexus, which has good policy implications for China to reduce CO2 emissions. The remainder of this paper is organized as follows: the next section describes the econometric methodology used in the study; Section 3 discuses data used and unit root tests; the fourth section presents Granger causality results; Section 5 presents generalized impulse responses, followed by conclusion and policy analysis in Section 6.

Appling the TY procedure and generalized impulse response, this paper investigates the temporal linkages among GDP, energy consumption, and carbon emissions for China during the period 1960–2007 in a multivariate model including gross fixed capital formation and urban population. The empirical finding of unidirectional Granger causality from real GDP to energy consumption in the long run implies that the government of China can implement stronger energy conservative policy without compromising economic growth in the long run. However, the results of impulse responses provide evidence that shocks in all variables, except urban population, have significant initial impact on one of them. Therefore, enhancing energy efficiency is an effective way to save energy. Although the energy intensity has experienced sharp decline in China, the energy intensity is rather high than that of world average level. So China should apply technological changes to greatly decrease energy intensity. China has made an ambiguous and challenging goal of decreasing the energy intensity by 20% between 2006 and 2010. Our results suggest that energy consumption Granger causes carbon emissions in the long run, but not vice versa. Hence, reducing energy consumption, especially the consumption of fossil fuel, seems to be an active way to reduce carbon emissions. It is worth noting that Coal accounts for about 70% of total primary energy in China, which is not only the dominant primary energy but also the dominant source of carbon emissions. On one hand, policies diversifying energy source may be applied to reduce the reliance on coal. China should take active measures to increase the utilization of cleaner energy sources (wind, solar, natural gas, nuclear power). To that respect China has set a specific target for the renewable and nuclear energy: the ratio of renewable energy to total primary energy consumption would be no less than 10% in 2010 and 15% in 2020 (The Medium and Long Term Development Plan for Renewable Energy in China, 2007). The installed capacity of nuclear electricity would up to 4 giga watt (GW), which accounts for 4% of total installed capacity in 2020 (The Medium and Long Term Plan for Nuclear Electricity in China, 2007). On the other hand, since roughly 60% of coal was used to generate power, sustainable coal technologies should be imposed on both the new and existing coal power plants in order to mitigate the environment pressure. Moreover, the small-scale low efficiency coal power plants should be phased out. China government has made a specific goal of closing a total of 50 GW inefficiency coal power plants between 2006 and 2010. Shocks in urban population have no significant initial impacts but positive effects on the others, so the accelerating industrialization has positive effects on the energy use and carbon emissions. The fact that rural population accounts for more than half of total population implies that agriculture should be an important sector in China. China should take measures to promote the development of agriculture, which is beneficial to alleviate environment pressure. The main contribution of the paper is to empirically investigate the inter-temporal links in the energy–environment–income nexus for China. The findings of this analysis may be unique to China due to its specific institutional characteristics. And finally, the results must be interpreted with due caution because of the finite sample.