Climate change and global warming are among the most urgent environmental problems confronting modern societies, posing a growing threat to human survival and development. Greenhouse gas emissions, mainly containing carbon dioxide (CO2), represent the principal cause of climate change. CO2 primarily results from fossil fuels combustion for energy production and transportation, producing about the 85% of global CO2 emissions. Thus, it is important to find alternative energy sources to mitigate CO2 emissions.
China has overtaken the USA as the biggest consumer of energy and largest contributor of CO2
emissions, with 20% of global energy consumption and 29% of total CO2
emissions. The country relies on fossil fuels, and in particular coal whose burning releases large amounts of CO2
into the atmosphere, as the main energy source. There are two main solutions to increasing energy consumption, greenhouse gas (GHGs) emission, and environmental pollution. One is to establish markets where emissions allowances can be traded and priced [1
]. The other is to improve the proportion of renewable energy and nuclear resources in the energy structure.
To mitigate CO2 emissions while sustaining economic and social development, China has undertaken initiatives to develop renewable and nuclear energy resources to replace traditional fossil fuels. The government has created energy policies to promote the use of clean energy. As a result, non-fossil energy consumption increased from 3.8% to 10.9% from 1965 to 2014. In addition, China plans to raise the share of non-fossil energy in the energy mix to around 20% by 2030.
Although the government has made great efforts to develop clean energy sources and obtained remarkable results, the effects of non-fossil energy on GHG emissions requires further empirical tests. There is a debate on whether non-fossil energy reduces carbon emissions, as their use may lead to extra emissions [5
]. For example, greenhouse gas emissions for the life cycle of solar panels account for approximately 32–79 g CO2
eq/kWh, while for solar collectors it is 11–68 g CO2
]. Therefore, this paper aims to assess whether an increase in the share of non-fossil energy would have a statistically significant effect on the reduction of CO2
Previous researchers investigated the contribution of non-fossil energy consumption to CO2 emissions. Most of these studies used different econometric methodologies to measure the effects of renewable and nuclear energy for emissions reduction. However, the results are contradictory and inconclusive.
Silva et al. [7
] examined the causal relationship between renewable energy sources and CO2
emissions between 1960 and 2004 in the USA, Spain, Portugal, and Denmark, concluding that the increase in the proportion of renewable energy in the energy mix reduced CO2
emissions in nearly all countries except the USA. Al-Mulali et al. [8
] found that renewable energy consumption cuts down on CO2
emissions in Western, Central and Eastern Europe, East Asia and the Pacific, the Americas and South Asia. Irandoust [9
] provided evidence supporting that renewable energy mitigates CO2
emissions in four Nordic countries. Dogan and Seker [10
] confirmed that expanding the use of renewable energy decreases CO2
emissions in the top renewable energy countries. Bento et al. [11
] and Tiwari [12
] arrived at the same conclusions for Italy and India; Bilgili et al. [13
], Bölük and Mert [14
], Saidi et al. [15
], Sebri et al. [16
], Özbuğday et al. [17
], and Dogan et al. [18
] provided similar results for 17 panel Organisation for Economic Co-operation and Development (OECD) countries, 16 European Union countries, nine developed countries, BRICS countries, thirty-six countries and the European Union, respectively.
However, Apergis et al. [19
] noted that use of renewable energy does not affect carbon emission reduction in the short-run. Menyah and Rufael [20
] explored the causal relationship between renewable energy consumption and CO2
emissions in the US between 1960 and 2007, discovering that renewable energy does not significantly contribute to the reduction of CO2
emissions. Chiu and Chang [21
] found that the renewable energy will begin to mitigate CO2
emissions when it represents at least 8.3889% of the total energy supply.
As for nuclear energy, Al-mulali [22
] found that it plays a major role in decreasing CO2
emissions in both the short and the long term, since it positively affects GDP growth without enhancing CO2
emission. Baek [23
] showed that nuclear energy and CO2
emissions have a negative long-run relationship in USA, France, Japan, Korea, Canada, and Spain. Nuclear energy has a favorable impact on mitigating CO2
emissions in Korea, USA and in in 12 major nuclear generating countries [20
On the contrary, Iwata et al. [27
] concluded that nuclear energy plays a minimal role in curbing CO2
emissions in most OECD countries. According to Jaforullah et al. [12
emission are unrelated to nuclear energy utilization in the USA when energy prices are not considered as a possible driving force of energy demand.
While numerous studies investigated the link between renewable energy, nuclear energy use, and CO2 emissions, little empirical work examined the association between total non-fossil energy consumption and CO2 emissions employing modern econometric methods. In addition, the empirical research largely focused on the short term impact of renewable and nuclear energy on CO2 emissions. Furthermore, to the best of our knowledge, few scholars investigated the effect of nuclear and renewable energy utilization on CO2 emissions specifically in China.
To fill these gaps, this paper aims to study the dynamic effects of non-fossil energy utilization on CO2 emissions within the cointegration framework. In particular, it investigates the short and long term impacts of non-fossil energy, economic growth, energy consumption, and trade openness on CO2 emissions in China employing autoregressive distributed lag (ARDL) and error correction models (ECM) and then testing their Granger causal relationship.
4. Conclusions and Policy Implications
China is faced with the environmental challenge to reduce its dependency on fossil fuels in order to substantially diminish its CO2 emissions. As alternatives to traditional energy, non-fossil energy usage is an effective means of mitigating climate change. This study investigates the long term relationship among CO2 emissions, economic development, non-fossil energy usage, energy consumption, and trade openness by using an ARDL model. The short term relationship dynamics were examined using ECM.
The results confirmed that there is both a long- and short-run relationship between CO2 emissions, non-fossil energy consumption, energy consumption, economic development, and trade openness. Non-fossil energy usage reduces CO2 emissions with a significant effect in the long run. This study finds that non-fossil energy consumption has a major part to play in curbing CO2 emissions in the long term in China. Trade openness and energy consumption cause a significant increase in carbon emissions both in the long and short term. However, GDP per capita does not have any remarkable impact on CO2 emissions in the long term but increases them in the short term. Therefore, the results prove that CO2 emissions are mainly determined by economic development, trade openness, and energy use in the short term. The Granger causality test shows one-way causal relationship from non-fossil energy usage to CO2 emissions. Other one-way causal relationships from GDP per capita to energy use and from CO2 emissions to trade openness were also confirmed. Moreover, there is bidirectional causality between CO2 emissions and energy usage.
These results have important implications for policy making. Specifically, the results indicate that the country’s energy usage and corresponding CO2 emissions will continue to grow over the long term in the coming decades. To reduce pollution as well as achieve economic stability and sustainable growth, it is necessary to continue increasing the share of renewable energy and reduce dependency on fossil fuels. For example, the government should formulate and implement effective policies to promote technology innovation in renewable and nuclear energy. It should also devote more attention to the subsidy system for clean energy prices and improve the pricing mechanisms for solar and wind power, as well as power generated from other non-fossil sources. It would also be necessary to introduce tax policies that encourage investments in non-fossil power generation, transmission and storage. Furthermore, the government should pay more attention to the effects of environmental deterioration resulting from increased trading activities. It is necessary to encourage enterprises to introduce advanced foreign technologies and managerial experience in the fields of environmental protection and clean manufacturing. The administration should also enhance environmental supervision of foreign-funded enterprises.