The Shock Effect of China´s Economic Growth on Main Energy´s Carbon Dioxide Emissions

In order to examine the shock effect of China´s economic growth on main energy´s (consist of raw coal and crude oil in this paper) carbon dioxide emissions. The impulse response functions (IRF) derived from a factor-augmented vector auto regression (FAVAR) model are used in this paper. By intruducing model´s operation steps and conducting 153 macroeconomic time series in quarterly frequency over the period 2000:1 to 2009:3, The two-stage approach is put to use. Empirical results indicate that, in general, two kinds of energy´s carbon dioxide emissions respond positively to GDP, but with regards to the size and length of the impact, the responses are heterogeneous. Following the increase in GDP, the growth rate of CO₂ emissions from raw coal is found to respond much more than the growth rate of CO₂ emissions from crude oil. Energy conservation and emission reduction as to raw coal should be given first priority to other energy resource in China.