Pollution haven or halo? The role of the energy transition in the impact of FDI on SO2 emissions

Chang Xu; Wenqi Zhao; Mengzhen Zhang; Baodong Cheng

doi:10.1016/j.scitotenv.2020.143002

Pollution haven or halo? The role of the energy transition in the impact of FDI on SO2 emissions

Sci Total Environ. 2021 Apr 1:763:143002. doi: 10.1016/j.scitotenv.2020.143002. Epub 2020 Oct 20.

Authors

Chang Xu¹, Wenqi Zhao², Mengzhen Zhang³, Baodong Cheng⁴

Affiliations

¹ School of Economics and Management, Beijing Forestry University, No.35, Tsinghua East Road Haidian District, Beijing, China. Electronic address: xuchang@bjfu.edu.cn.
² School of Economics and Management, Beijing Forestry University, No.35, Tsinghua East Road Haidian District, Beijing, China. Electronic address: zhaowq@bjfu.edu.cn.
³ Faculty of Agriculture and Forestry, University of Helsinki, Latokartanonkaari 7, Helsinki, Finland. Electronic address: mengzhen.zhang@helsinki.fi.
⁴ School of Economics and Management, Beijing Forestry University, No.35, Tsinghua East Road Haidian District, Beijing, China. Electronic address: baodong@bjfu.edu.cn.

PMID: 33187715
DOI: 10.1016/j.scitotenv.2020.143002

Abstract

This paper explores how the relationship between FDI and SO2 emissions has been affected by the energy transition. We applied a semi-parametric method to a STIRPAT model using Chinese provincial panel data from 2002 to 2016 to conduct an empirical analysis of FDI and SO2 emissions and analyze the effects of FDI on the energy transition. We found that FDI and SO2 emissions are characterized by an inverted U-shaped relationship; FDI and coal consumption have an inverted U-shaped relationship, and FDI and natural gas consumption have a U-shaped relationship. Moreover, the use of coal significantly increases SO2 emissions while the use of natural gas significantly reduces them. Our research shows that technological advances have increased coal consumption and that there has been no reduction of SO2 emissions in China. Overall, our analysis provides mixed support for the pollution haven and pollution halo hypotheses.

Keywords: Energy transition; FDI; Pollution haven hypothesis; SO2 pollution; STIRPAT model.