Renewable energies, economic growth and CO2 emissions in thirty provinces of China: dynamic simultaneous equations panel analysis

Abstract

To investigate the relationships among economic growth, renewable energies, and CO2 emissions, the study uses panel data set of 30 Chinese provinces over 2014–2020 as sample set and employs four simultaneous equation models based on four different renewable energies: thermal, solar, wind, hydro. The residual Sum Square (RSS) results confirm that the dynamic GMM is better than the SUR estimation. The empirical results show that economic growth negatively correlates with thermal and wind energies, while positively affecting solar and hydro energies. Similarly, thermal, wind and solar energies and economic growth mutually reinforce carbon dioxide emissions. The dynamic effect describes the significant positive impact between the lag value and the current value of economic growth and renewable energies, indicating that both variables tend to increase over time. The one lag of carbon dioxide harms its current values, meaning that the Chinese government has been working hard to reduce emissions. Therefore, the use of renewable energies, primarily hydro and solar energies, has a specific role in promoting economic growth, and economic growth also indirectly promotes the development of renewable energies. The positive relationship between economic growth and carbon dioxide shows that the current economic growth is still at the cost of carbon dioxide emissions in China, so adjusting the industrial structure is the inevitable choice of the new growth model.