Dynamic relationship between non-renewable energy consumption and economic development in China

This research examines the relationship between non-renewable energy consumption and economic development in China. It uses a PVAR model to empirically test the dynamic impact of non-renewable energy consumption and economic development in 27 provinces (autonomous regions and municipalities) in mainland China from 2008 to 2019. The research reveals that: (i) A two-way Granger causality exists between China's non-renewable energy consumption and economic development. (ii) In China, the self-driven impact of non-renewable energy consumption and economic development exceeds their mutual interaction. Both have a positive role in promoting their own development, but their influence gradually weakens over time. (iii) China's non-renewable energy consumption and economic development show a generally positive mutual promotion relationship, but the degree of mutual influence between the two is different. Economic development positively affects non-renewable energy consumption, but the effect fades over time. Non-renewable energy consumption positively affects economic development, but it has a certain lag. Overall, there is an unequal impact between the two, and the contribution of economic development to non-renewable energy consumption far exceeds that of non-renewable energy consumption to economic development. According to these findings, this paper proposes several options for China: given the dependency of China on fossil fuels for economic development, one option is to increase carbon capture and storage to reduce the impact of climate change. Relevant departments need to rationally distribute and utilize resources, increase high-value-added carbon conversion technologies, and promote the development of CCS projects and cluster construction to mitigate the impact of climate change. Another option for China is infrastructure development to enable the transition from fossil fuels to renewable electricity to reduce the reliance of economics development on fossil fuels. Relevant departments should promote the flexible transformation of coal power, accelerate the construction of new energy storage and the transformation and upgrading of distribution networks, support the development of a high proportion of green energy, and form a diversified renewable electric power supply system. Finally, an additional option for China is to decouple economic development from energy consumption through energy efficiency measures, reducing energy consumption per unit of economic productivity. The government can promote energy-efficient technologies, increase price elasticity, and encourage industries and households to adopt energy-efficient equipment, motivating enterprises and individuals to increase energy efficiency.