The Impacts of Non-Renewable Energy Consumption and Education Expenditure on CO2 Emission Intensity of Real GDP in China

Abstract

BackgroundWith the economic development, China has become the world's largest CO2 emitter. Given that climate warming has increasingly become the focus of the international community, Chinese government committed to reducing its CO2 emission intensity substantially. Prior studies find that the evolution of economic structure and technological progress can reduce CO2 emissions, but lack of considering CO2 emissions and output as a whole. In addition, the role of education expenditure is relatively overlooked. This paper contributes to the literature by examining the link of CO2 emission intensity, non-renewable energy consumption and education expenditure in China during 1971-2014. ResultsWe use the ARDL approach and find that in the long run, every 1% increase in non-renewable energy consumption results in a 0.92% increase in CO2 intensity, while every 1% increase in operational education expenditure reduces the CO2 intensity by 0.86%. In the short term, 36% of the deviation from the long run equilibrium is corrected in the next period.ConclusionsWe draw out two important conclusions and make important policy recommendations. First and foremost, as long as the increase in operational educational expenditure exceeds the increase in non-renewable energy consumption, CO2 intensity of real GDP will decrease in the long run. This means that in the development stage when economic activities are still highly dependent on non-renewable energy sources, the Chinese government should continue to vigorously increase expenditures on public education. Second, the increase in non-renewable energy consumption will result in an increase in CO2 intensity of real GDP. Therefore, gradually increasing the proportion of clean energy consumption in the energy nexus is another powerful starting point for China to achieve its goal of reducing CO2 intensity of real GDP.JEL ClassificationC32. I2. Q4. Q53. Q56.