Do energy use and economic policy uncertainty affect CO2 emissions in China? Empirical evidence from the dynamic ARDL simulation approach

Abstract

Global warming is currently the biggest problem. China is the world's highest CO₂ emitter. The Chinese authorities agreed to overcome global pollution per the current Paris treaty and have shown deep concern regarding global warming. Hence, policymakers are paying attention to economic policy uncertainty. Motivated by this issue, the study examines the effect of energy use, economic policy uncertainty, and economic growth on China's CO₂ emissions from 1970 to 2018 by employing a novel dynamic ARDL simulation model. The findings show that energy use and economic growth have statistically substantial long-run and short-run positive effects on CO₂ emissions. However, economic policy uncertainty has a statistically insignificant effect on CO₂ emissions, due to firms' sustainability policies. Energy use can have valuable policy consequences, particularly for environmental sustainability. Therefore, based on the empirical findings, the crucial partnership and feedback on China's carbon emission policy should be carried forward.

Keywords: CO2 emissions; Dynamic ARDL; Economic policy uncertainty; Energy use; GDP.