Assessing the Impact of Fossil Fuel Prices on Renewable Energy in China Using the Novel Dynamic ARDL Simulations Approach

Ousama Ben-Salha, Abdelaziz Hakimi, Taha Zaghdoudi, Hassan Soltani and Mariem Nsaibi
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Abdelaziz Hakimi: V.P.N.C Lab, Department of Management, Faculty of Law, Economics and Management of Jendouba, University of Jendouba, Jendouba 8189, Tunisia
Hassan Soltani: Department of Administration, College of Science and Arts in Balgarn, University of Bisha, Bisha P.O. Box 199, Saudi Arabia
Mariem Nsaibi: Management Information Systems Department, Applied College, University of Ha’il, Hail City P.O. Box 2440, Saudi Arabia

Sustainability, 2022, vol. 14, issue 16, 1-17

Abstract: The past few decades have been marked by a gradual but steady increase in the reliance on renewable energy. In this study, we examined whether the prices of fossil fuels, namely, oil, coal, and natural gas, have affected renewable energy consumption in China during the period 1980–2018. To this end, we employed the novel dynamic Autoregressive Distributed Lag simulations approach. In the light of the empirical investigation, some intriguing conclusions have been drawn. We found strong evidence of the cointegrating relationship between the prices of all fossil fuels and renewable energy consumption. Furthermore, rising oil, coal, and natural gas prices resulted in increased renewable energy consumption in the long run, confirming that renewable energy sources can substitute fossil fuel energy only in the long run. Nevertheless, there is no evidence of significant effects in the short run. When considering the presence of structural breaks, the findings confirm the robustness of the dynamic ARDL simulations, as we conclude that fossil fuel prices positively affect renewable energy consumption only in the long run.

Keywords: oil price; natural gas price; coal price; renewable energy; China; dynamic ARDL simulations (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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