Exploring the dynamics of carbon emissions in China: Insights from ARDL and DOLS

Yanli Shen () and Abdul Rais Abdul Latiff ()

The Economics and Finance Letters, 2025, vol. 12, issue 2, 314-328

Abstract: The research aims to justify the existence of the Environmental Kuznets Curve (EKC) hypothesis in China by analyzing key determinants of emissions and their influence on CO2 production, including economic expansion, energy consumption, urbanization, trade openness, and renewable energy adoption. The study utilizes World Development Indicators data and employs econometric analysis using the Autoregressive Distributed Lag (ARDL) and Dynamic Ordinary Least Squares (DOLS) methods. These approaches were chosen to provide both long-term and short-term insights into the relationships between CO2 emissions and their influencing variables. The empirical results confirm the EKC hypothesis in China, showing that CO2 emissions rise with income up to a certain threshold and decline thereafter. Energy consumption, particularly coal use, is identified as the primary contributor to emissions. While trade openness is associated with increased emissions, the effect of urbanization on emissions is inconsistent. Renewable energy currently has a minimal impact due to its lower contribution compared to fossil fuels. The findings highlight the complex nature of reducing CO2 emissions in a rapidly growing economy like China. Effective environmental policies are needed to achieve sustainable development. China should enhance renewable energy capabilities, implement structural changes in energy usage, and integrate environmental concerns into trade and urban development policies to support sustainable growth.

Keywords: ARDL; China; CO₂ emissions; DOLS; Environmental Kuznets curve. (search for similar items in EconPapers)
Date: 2025
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