The role of clean energy, fossil fuel consumption and trade openness for carbon neutrality in China

China has set itself the ambitious goal of becoming carbon-neutral by 2060. This work explores the long- and short-run relationships between CO2 emissions, real GDP, clean energy, fossil fuel consumption, and trade openness in China covering the period of 1992-2020. 1992 is suggested as the starting year as China's economy transferred to a market-oriented open economy starting in that year. The findings verified that long-run equilibrium cointegration existed among the analyzed variables. The hypothetical environmental Kuznets curve (EKC) could further be verified. Besides, clean energy use potentially improves environmental quality measured by the long-run impact on CO2 emissions. A 1% increase in clean energy consumption significantly decreases the CO2 emissions by 0.68% in the long run. In contrast, CO2 emissions are dramatically influenced by per capita income, fossil fuel consumption, and trade openness. It is suggested that environmental policies should be reinforced, and clean energy consumption be encouraged as a practical solution to reducing CO2 emissions to reach China's carbon neutrality target. This work specifically highlights the important benefits of nuclear energy and hydropower in supporting carbon neutrality in the long run, and suggests that China (1) continues to invest in its clean energy industry and (2) encourages less energy-intensive, clean production processes that have the potential to reach carbon neutrality in the long term. Both suggestions will help reaching the carbon-neutrality target by 2060. (C) 2022 The Author(s). Published by Elsevier Ltd.

Automated summary

This study explores the relationships between CO2 emissions, real GDP, clean energy, fossil fuel consumption, and trade openness in China from 1992 to 2020. The findings confirm the existence of long-term equilibrium cointegration and support the validity of the environmental Kuznets curve (EKC). The study highlights the positive impact of clean energy consumption on environmental quality and suggests reinforcing environmental policies and encouraging clean energy use to achieve carbon neutrality.