Decoupling emissions of greenhouse gas, urbanization, energy and income: analysis from the economy of China

Abstract

The adoption and ratification of relevant policies, particularly the household enrolment system metamorphosis in China, led to rising urbanization growth. As the leading developing economy, China has experienced a drastic and rapid increase in the rate of urbanization, energy use, economic growth and greenhouse gas (GHG) pollution for the past 30 years. The knowledge of the dynamic interrelationships among these trends has a plethora of implications ranging from demographic, energy, and environmental and sustainable development policies. This study analyzes the role of urbanization in decoupling GHG emissions, energy, and income in China while considering the critical contribution of energy use. As a contribution to the extant body of literature, the present research introduces a new phenomenon called "the environmental urbanization Kuznets curve" (EUKC), which shows that at the early stage of urbanization, the environment degrades however, after a threshold point the technique effects surface and environmental degradation reduces with rise in urbanization. Applying the autoregressive distributed lag model and the vector error correction model, the paper finds the presence of inverted U-shaped curve between urbanization and GHG emission of CO₂, while the same hypothesis cannot be found between income and GHG emission of CO₂. Energy use in all the models contributes to GHG emission of CO₂. In decoupling greenhouse gas emissions, urbanization, energy, and income, articulated and well-implemented energy and urbanization policies should be considered.