Income Growth, Energy Consumption and Carbon Emissions in China

The paper examines the long-run relationship between per capita income growth, energy consumption, and pollutant emissions in China during the period 1953-2004. We find that energy consumption, pollutant emissions and income are cointegrated in the long run. To supplement the findings of cointegrating analysis, we assess the causal relationships using Granger causality test and find strong evidence for bilateral causality running between income growth with energy consumption and pollutant emissions, both in the short-run and long-run. We further provide policy suggestions.