Energy Transition and Poverty Alleviation in Light of Environmental and Economic Challenges: A Comparative Study in China and the European Union Region

Abstract

This study aims to compare the effectiveness of renewable energy and circular economy practices in reducing environmental damage and poverty in China and the European Union (EU) by using the Autoregressive Distributed Lag (ARDL) approach and the Vector Error Correction Model (VECM) technique. Analyzing data from 1995 to 2022, we compared the effectiveness of these approaches in both regions. This study offers several fresh perspectives on the fight against environmental damage and poverty, differentiating itself from existing research in a few key ways. In fact, most studies focus on a single region’s approach to sustainability. However, this research directly compares China and the European Union (EU), highlighting how factors like economic structure and development stages influence the effectiveness of renewable energy and circular economy practices. Also, this study shows how renewable energy and circular practices can simultaneously tackle both environmental damage (emissions) and social issues (poverty). Our findings reveal that factors like poverty, fossil fuel reliance, economic growth, and international trade all contribute to rising carbon emissions in both China and the EU, though their influence varies. Interestingly, China experienced greater success in curbing emissions through solar power, circular economy measures, and wind power compared to the EU. Additionally, the impact of these strategies on poverty reduction differed significantly between the two regions. Based on these results, we recommend that policy makers in both regions develop tailored strategies for tackling carbon emissions and poverty. Prioritizing renewable energy sources and circular practices is key, as they can simultaneously reduce emissions and alleviate poverty. However, it is crucial to focus on approaches that work best in each specific region, considering social, economic, and environmental factors. This study suggests that a one-size-fits-all approach will not work for fighting climate change and poverty. While renewable energy and circular economies are effective, China saw greater success with solar and wind power compared to the EU. Policy makers need to design strategies specific to their region’s economic, social, and environmental context. Further research can refine these approaches, and public education is crucial to promote sustainable behavior and empower policy makers. It is also needed to refine and improve the implementation of these strategies. Finally, public awareness and education are essential to promote sustainable behavior and empower policy makers in their fight against climate change and poverty. This study highlights the importance of a region-specific approach to energy transition and poverty alleviation. By comparing China and the EU, we gain valuable insights into the effectiveness of different strategies in tackling these interconnected challenges. The findings provide valuable guidance for policy makers looking to create a more sustainable and equitable future.