Does green investment, financial development and natural resources rent limit carbon emissions? A provincial panel analysis of China

Yijuan Shen; Zhi-Wei Su; Muhammad Yousaf Malik; Muhammad Umar; Zeeshan Khan; Mohsin Khan

doi:10.1016/j.scitotenv.2020.142538

Does green investment, financial development and natural resources rent limit carbon emissions? A provincial panel analysis of China

Sci Total Environ. 2021 Feb 10;755(Pt 2):142538. doi: 10.1016/j.scitotenv.2020.142538. Epub 2020 Sep 28.

Authors

Yijuan Shen¹, Zhi-Wei Su², Muhammad Yousaf Malik³, Muhammad Umar⁴, Zeeshan Khan⁵, Mohsin Khan⁶

Affiliations

¹ School of Business, Wuchang University of Technology, Wuhan, China. Electronic address: 120160482@wut.edu.cn.
² School of Business, Wuchang University of Technology, Wuhan, China. Electronic address: zhiwsu@hotmail.com.
³ Institute of South-South Cooperation and Development (ISSCAD), National School of Development (NSD), Peking University, Beijing, China. Electronic address: yousafmalik@pku.edu.cn.
⁴ School of Economics, Qingdao University, China. Electronic address: umar@qdu.edu.cn.
⁵ School of Economics and Management (SEM), Tsinghua University, Beijing 100084, China. Electronic address: zeeshan.17@sem.tsinghua.edu.cn.
⁶ School of Environment, Tsinghua University, Beijing 100084, China. Electronic address: hanms17@mails.tsinghua.edu.cn.

PMID: 33045608
DOI: 10.1016/j.scitotenv.2020.142538

Abstract

This study investigates the role of natural resources rent, green investment, financial development and energy consumption in mitigation of carbon emissions to achieve sustainable development goal of a clean environment by using the panel data of 30 provinces of China from 1995 to 2017. This study employs novel cross-sectionally augmented autoregressive distributed lags (CS-ARDL) methodology to find the long and short-run impact of the variables of the study on carbon emission, where CS-ARDL estimates confirm the positive impact of energy consumption and financial development on carbon emissions (CO₂). Moreover, green investment is negatively linked to CO₂, whereas national natural resources rent is positively associated with carbon emissions. Similarly, augmented mean group and common correlated effect mean group methods provide supportive results for CS-ARDL estimates. This study recommends strengthening of national natural tax law, promotion of green investment and environmental-friendly policies to control carbon emissions.

Keywords: CS-ARDL; China; Financial development; Green investment; Natural resources rent.