Does Non-Fossil Energy Usage Lower CO2 Emissions? Empirical Evidence from China

Abstract

This paper uses an autoregressive distributed lag model (ARDL) to examine the dynamic impact of non-fossil energy consumption on carbon dioxide (CO₂) emissions in China for a given level of economic growth, trade openness, and energy usage between 1965 and 2014. The results suggest that the variables are in a long-run equilibrium. ARDL estimation indicates that consumption of non-fossil energy plays a crucial role in curbing CO₂ emissions in the long run but not in the short term. The results also suggest that, in both the long and short term, energy consumption and trade openness have a negative impact on the reduction of CO₂ emissions, while gross domestic product (GDP) per capita increases CO₂ emissions only in the short term. Finally, the Granger causality test indicates a bidirectional causality between CO₂ emissions and energy consumption. In addition, this study suggests that non-fossil energy is an effective solution to mitigate CO₂ emissions, providing useful information for policy-makers wishing to reduce atmospheric CO₂.