Novel research methods on evaluating the nexus between energy consumption, economic growth and environment: evidence from China

Since the debate concerning economic growth, energy consumption, and environmental degradation is a burning issue in the last few decades. Yet the outcomes are controversial and requires more empirical work. This study used novel research methods to investigate the said issue in case of China since is the leading energy importing and pollution emitting economy. The time series data covers the period from 1969 to 2018 is analyzed via employing the novel Quantile-on-Quantile regression methods. The estimated results unveil that fossil fuel consumption significantly enhances carbon emissions in the country in the lower and middle quantiles. Besides, the economic growth showed an inverted U-shaped impact on the carbon emissions, where the lower-medium quantiles showed positive and the upper quantiles exhibit negative impact on carbon emissions. Besides, the positive association between economic growth and fossil fuel emissions are also evident in the analysis. The Granger causality indicates that there is a bidirectional causality between the study variables – validating that economic growth and fossil fuel consumption are the primary sources of increased emissions level. On the basis of empirical results, this study suggests the adoption of energy efficient/saving products and services, diverting economic growth to renewable and environmentally friendly energy resources, technological innovation and increased investment in the research and development to reduce dependency on fossil fuel energy consumption and attain low carbon economy.