Analyzing environmental delivery of industrial technology and energy use-loss in China

This study examines key indicators impacting China’s industrial sector: carbon dioxide (CO2) emissions by industry, industrial value added per worker, technology advancement in industrial design, fossil fuel usage, and energy losses in production and transmission. China’s industrial sector, heavily reliant on fossil fuels, has significant implications for environmental quality, establishing the country as the leading global carbon emitter. Rising energy losses compound economic challenges by driving up energy demand, increasing external dependencies, and straining foreign exchange reserves. In this context, we analyze how China’s industrial environment responds to technology adoption, energy losses, and fossil fuel usage. Using Fourier extensions enriched with time-series analyses, we assess the direction and magnitude of these responses, alongside testing the Environmental Kuznets Curve (EKC) hypothesis using Fully Modified Ordinary Least Squares, Canonical Cointegrating Regressions, and Dynamic Ordinary Least Squares methods. Our findings affirm the EKC hypothesis for China’s industrial sector, revealing that while fossil fuel usage and energy losses drive up CO2 emissions, advancements in industrial technology can offset some of these environmental impacts by reducing carbon emissions. Based on these findings, policymakers should focus on technological innovations that help decrease energy losses and fossil fuel consumption within the industrial sector.