Urbanization and industrialization impact of CO2 emissions in China

This study investigates the causal linkage among CO2 emissions per capita, energy intensity, real GDP per capita, industrialization (share of industrial value added in GDP), urbanization (share of urban population in total population), and share of renewable energy consumption in China over the period from 1970 to 2015. We employ autoregressive distributed lag (ARDL) technology to test the co-integration and short- and long-run estimates, and apply the vector error correction model (VECM) to analyze the directional causality among the time series data. The estimates of long-run parameters indicate that 1% augments of energy intensity, real GDP, industrialization, and urbanization increase CO2 emissions by 1.1%, 0.6%, 0.3%, and 1.0%, respectively. Long-run feedback Granger causalities exist among emissions, real GDP, and industrialization. Thus, our main policy suggestions are as follows: (i) to encourage green and sustainable urbanization, as it increases economic growth but not at the expense of environmental degradation; (ii) to strategically adjust and optimize the industrial structure; (iii) to improve the efficiency of energy use and technological innovation; and (iv) to increase the proportion of renewable energy in total energy consumption.