What cause a surge in China's CO2 emissions? A dynamic vector autoregression analysis

Global warming is an urgent environmental problem facing the world and carbon dioxide (CO2) emission is the root causes. China is already the largest emitter of carbon dioxide in the world. Thus, investigating the main driving forces of CO2 emissions has important practical significance for China's emission reduction and global efforts to enhance environmental protection. This study applies vector autoregressive model to investigate the driving forces of the rise in China's CO2 emissions. The results show that the impact of economic growth supports the Environmental Kuznets hypothesis, due to massive fixed-assets investment and exports. Urbanization produces an inverted “U-shaped” effect owing to population mobility and motor vehicle use. The impact of energy structure also shows an inverted “U-shaped” pattern because of the change in coal consumption. However, the reduction effect of energy efficiency is significant in the medium term, but is limited in the short and long terms. Therefore, the government should pay attention to the different impacts of these driving forces at different stages of development, when formulating emission reduction policies.