THE CARBON CURVE OF A RISING POWER: HOW GLOBALIZATION AND ENERGY POLICY SHAPE CHINA’S EMISSIONS PATHWAY

Abstract

This study investigates the relationship between economic growth, coal consumption, globalization, and carbon dioxide (CO₂) emissions in China within the framework of the Environmental Kuznets Curve (EKC) hypothesis. Using annual data from 1970 to 2024, the analysis incorporates the KOF Index of Globalization alongside economic and environmental variables to capture the multidimensional effects of globalization. Employing the combined cointegration approach by Bayer and Hanck and the Autoregressive Distributed Lag (ARDL) bounds testing method, the results confirm a long-run equilibrium relationship among the variables. The findings validate the EKC hypothesis for China, revealing that economic growth initially increases CO₂ emissions, which subsequently decline after reaching a certain income threshold. Coal consumption is identified as a significant contributor to rising emissions, while globalization exerts a mitigating effect, reducing environmental degradation through technological advancement and structural transformation. The VECM Granger causality analysis uncovers feedback relationships between coal consumption and CO₂ emissions and identifies economic growth and globalization as key drivers of environmental outcomes. The study highlights the need for China to transition toward a low-carbon economy by diversifying its energy mix, enhancing energy efficiency, and promoting cleaner energy sources. It also emphasizes the importance of regional policy strategies and sector-specific analyses for sustainable environmental and economic development.

Keywords: Environmental Kuznets Curve (EKC), CO₂ Emissions, Globalisation, Renewable Energy