Renewable and Non-Renewable Energy Consumption: Comparison
Please note this is a comparison between Version 1 by Yugang He and Version 2 by Dean Liu.

TIn the extant literature, there are numerous discussions on China’s environmental sustainability. However, few scholars have considered renewable energy consumption and trade policy simultaneously to debate environmental sustainability. Therefore, researchers this paper attempts to examined how renewable and non-renewable energy consumption, bio-capacity, economic growth, and trade policy dynamically affect the ecological footprint (a proxy for environmental sustainability). Researchers suUsing the data from 1971 to 2017 and employing the auto-regressive distributed lag model to perform an empirical analysis, the results demonstrate that renewable energy consumption and trade policy are conducive to environmental sustainability because of their negative impacts on the ecological footprint. However, the results also indicate that bio-capacity, non-renewable energy consumption, and economic growth are putting increasing pressure on environmental sustainability due to their positive impacts on the ecological footprint. Moreover, to determine the direction of causality between the highlighted variables, the Yoda-Yamamoto causality test was conducted. The results suggest a two-way causal relationship between renewable energy consumption and ecological footprint, non-renewable energy consumption and ecological footprint, and economic growth and ecological footprint. Conversely, the results also suggest a one-way causal relationship running from bio-capacity and trade policy to the ecological footprint.

  • renewable and non-renewable energy consumption
  • trade policy

1. Introduction

According to the definition of the Global Footprint Network, an ecological footprint refers to an operable qualitative approach in which a specific number of people consume, according to a certain lifestyle, various commodities and service functions provided by the natural ecosystem, and the waste generated in this process that needs to be absorbed by the environment, expressed in terms of bio-productive land area. By comparing the demand of the ecological footprint with the carrying capacity of the natural ecosystem (also known as ecological footprint supply), researchers can quantitatively judge the state of sustainable development of a country or region so as to make scientific planning and suggestions for human survival and socioeconomic development in the future. As a result, a large number of scholars [1][2][3][1,2,3] use the ecological footprint as a proxy for environmental sustainability to study the effects of other factors on environmental sustainability.
China relies significantly on its natural and intellectual resources as it pursues fast economic growth [4]. Natural resources are mostly used and consumed in the early stages of China’s economic growth because they are easy to utilize and consume. Although natural resource consumption contributes to China’s economic growth, this kind of consumption pattern degrades China’s environmental sustainability [5][6][5,6]. As a result, China has begun to employ intellectual resources to substitute for natural resources in order to reduce the continuous consumption of natural resources and progressively improve the degree of environmental deterioration in China. However, because of the high cost of implementation, China may not have been able to deploy alternative resources, as the cost of implementation may have an influence on economic development [7]. Consequently, the consumption of fossil fuels is primarily to seek energy generation to advance China’s industrialization. Because China’s absorption capacity of water, land, and air may not be adequate to satisfy the wastewater generated during an economic expansion, China’s bio-capacity is limited by the degradation of the environment induced by the use of fossil energy alternatives [8]. In reality, the phrase “ecological footprint” is a term used to describe this carrying capacity. Generally speaking, the ecological footprint is described as the entire amount of water and territory claimed by economic participants to generate all the resources they use and continually absorb all the trash they generate using standard measures. As China enters the system of sustainable development goals, the necessity of achieving sustainable development goals by 2030 becomes clearer. As a result, China is attempting to restructure its energy and environmental policies to establish the groundwork for achieving sustainable development goals by reducing environmental degradation caused by its ecological footprint.
At the moment, several areas of China are experiencing ecological deficits, despite the fact that the ecosystem is meant to rebound spontaneously and adapt to environmental changes. Nonetheless, according to China’s ecological accounting, this is not the case, resulting in major environmental sustainability issues. Previous studies [9][10][11][12][9,10,11,12], particularly for China, have identified rapid economic growth, a large population, and massive energy consumption (particularly non-renewable energy consumption) as factors creating environmental degradation. The implementation of China’s new trade policies, such as the outward transfer of China’s domestic high-polluting enterprises or the restriction on the import of foreign garbage and other high-polluting goods, has impacted the dynamics of environmental quality in recent years. China, for example, limited its overseas foreign garbage trading activities. This suggests that prior to the establishment of this trade policy, China imported more foreign garbage from other countries. Despite rising economic growth, environmental pollution worsened. Aside from the dynamics of China’s trade policies, the rise in China’s renewable energy consumption is another factor that is exacerbating the need for its ecological footprint. It is worth mentioning that these factors are linked to China’s bio-capacity deterioration. Based on the aforementioned purpose, researchers investigated the effects of renewable and non-renewable energy consumption, trade policy, bio-capacity, and economic growth on China’s ecological footprint.

2. Environmental Sustainability and Energy Consumption

The areas of environmental sustainability, economic growth, and energy consumption have been vastly investigated and discussed in the literature. Sharma et al. [13] used the eight developing countries of South and Southeast Asia as a sample to explore the effect of renewable energy consumption on the ecological footprint from 1990 to 2015. Employing a cross-sectional augmented autoregressive distributed lag model to undertake an empirical analysis, they found that renewable energy consumption significantly contributed to improving environmental sustainability in the long and short run. Specifically, a 1% increase in renewable energy consumption resulted in a 0.216% decrease in the ecological footprint in the long run and a 0.318% decrease in ecological footprint in the short run. Ulucak and Khan [14] studied the same topic in BRICS countries from 1992 to 2016. They conducted an empirical analysis using both the dynamic ordinary least squares method and the fully modified ordinary least squares method and discovered that renewable energy consumption reduced the ecological footprint, implying that it contributed to environmental sustainability. Subsequently, Ansari et al. [15] used the same methods to discuss this topic from 1991 to 2016. They also found that renewable energy consumption had a negative effect on the ecological footprint. Similarly, Caglar et al. [16] used the world’s top 10 pollutant footprint countries as an example of how renewable energy consumption affects the ecological footprint quality. Through the estimation of an auto-regressive distribution lag model, they found that renewable energy consumption abated environmental deterioration in these countries, implying that renewable energy consumption was conducive to environmental sustainability. Moreover, these findings were also supported by Nathaniel et al. [17] and Kongbuamai et al. [18]. However, using a sample from the Middle East and North Africa region from 1990 to 2016, Nathaniel et al. [19] employed the Augmented Mean Group algorithm to study the role of renewable energy consumption on the ecological footprint. They found that renewable energy did not contribute significantly to environmental sustainability. The relationship between trade and environmental sustainability has become a hot topic. With the expansion of trade links between Turkey and the Caspian Sea area countries (including Turkmenistan, Iran, Russia, Kazakhstan, and Azerbaijan), an increasing number of people are demanding the environmental quality of trade. Onifade et al. [20] discovered that trade expansion greatly slowed environmental deterioration using dynamic ordinary least squares and fully modified ordinary least squares. Meanwhile, Khan et al. [21] studied the environmental impact of trade in 176 countries throughout the globe. They discovered that trade contributed greatly to environmental sustainability by using the ordinary least squares, generalized methods of moments, and fixed effects. Alola et al. [22] investigated the impact of trade policy on environmental sustainability using a balanced panel of 16 EU countries from 1997 to 2014 and the panel pool mean group autoregressive distributive lag model. They found that trade policy aided environmental sustainability. However, Chakraborty and Mukherjee [23] studied the impact of exports on environmental sustainability in 114 countries from 2000 to 2010. Using panel data for empirical studies, they discovered that exports had a favorable impact on environmental sustainability. Furthermore, Iheonu et al. [24] found that international trade had enhanced environmental sustainability in certain countries with the lowest and highest levels of current carbon dioxide emissions. These results were consistent with Saint Akadiri et al. [25], Nathaniel and Khan [26], and Nathaniel et al. [27]. Considering the effect of economic growth on environmental sustainability, Ahmed et al. [28] discussed the impact of economic growth on the ecological footprint. They used G7 countries as a case study from 1985 to 2017 to perform an empirical analysis. Their results, based on the CUP-FM method and Dumitrescu Hurlin test, reported that economic growth increased the ecological footprint. In Nigeria, Udemba [29] employed the auto-regressive distributed lag method and Granger causality approach to analyze the effect of economic growth on the ecological footprint from 1981 to 2018. Their results suggested that economic growth positively affected the ecological footprint via the estimation of the auto-regressive distributed lag method. Their results also revealed that a causal relationship runs from economic growth to the ecological footprint via the analysis of the Granger causality approach. Using similar approaches, Ahmad et al. [30] also examined this topic in 22 emerging economies from 1984 to 2016. They found that, in the long run, economic growth expanded the ecological footprint. Moreover, they also found that the quadratic term for economic growth has a negative effect on the ecological footprint. Meanwhile, by the estimation of the Dumitrescu-Hurlin Granger causality test, their results revealed that economic growth significantly altered the ecological footprint. In addition, Baz et al. [31] used a different method, an asymmetric and nonlinear approach, to investigate the effect of economic growth on the ecological footprint from 1971 to 2014 in Pakistan. Their results showed that a neutral effect was found between environmental quality and economic growth. Additionally, using a STIRPAT framework, Kihombo et al. [32] studied a similar proposition from 1990 to 2017 in West Asia and Middle East countries. They also obtained a consistent result. Furthermore, these above findings were supported by Ikram et al. [33], Acar and Aşıcı [34], and Hussain et al. [35]. Concerning the effect of non-renewable energy consumption on environmental sustainability, Usman and Makhdum [36] used India, Russia, Brazil, China, South Africa, and Turkey as samples to study this topic from 1990 to 2018. Employing the second-generation co-integration and causality tests to perform an empirical analysis, they found that non-renewable energy consumption positively affected the ecological footprint. Concretely, a 1% increase in non-renewable energy consumption led to a 0.551% increase in the ecological footprint. Additionally, Usman et al. [37] investigated this proposition with the 15 highest emitting countries from 1990 to 2017. Their findings suggested that non-renewable energy consumption was one of the most significant factors that hindered environmental sustainability because of its positive effect on the ecological footprint. Meanwhile, Christoforidis and Katrakilidis [38] also considered this issue. Regarding the 29 Organization for Economic Co-operation and Development countries, employing the robust cross-sectional augmented distributed lag approach and using panel data from 1984 to 2016 for the empirical study, their results revealed that non-renewable energy consumption was detrimental to environmental sustainability. Furthermore, there was a two-way causal association between non-renewable energy consumption and environmental sustainability. With similar research objects from 1990 to 2015, and Wasteland’s panel co-integration test, Khan et al. [39] also found that non-renewable energy consumption deteriorated environmental sustainability because non-renewable energy consumption positively affected the ecological footprint. With a similar method, Sahoo and Sethi [40] studied this problem with a sample of developing countries from 1990 to 2016. They achieved the same result. Moreover, they also used the dynamic ordinary least squares and the fully modified ordinary least squares approaches to re-examine this result. The result of this problem was reliable and robust. In addition, these findings were also supported by Rout et al. [41], Khan and Hou [42], Wang et al. [43], and Naqvi et al. [44]. With regard to the effect of bio-capacity on environmental sustainability, Hassan et al. [45] used the auto-regressive distributed lag model to estimate the influence of bio-capacity on the ecological footprint from 1971 to 2014. They found that bio-capacity increased the ecological footprint. Meanwhile, Galli et al. [46] found that in China, bio-capacity positively affected the ecological footprint, while in India, this result was not consistent. Moreover, Chen et al. [11] employed 16 Central and Eastern European countries as an example to measure environmental sustainability from 1991 to 2014. Using the dynamic, seemingly unrelated co-integration regression, feasible generalized least squares, and generalized method of moment to undertake an empirical analysis, their results reported that a significant effect of bio-capacity on the ecological footprint was positive, which implied that bio-capacity hindered environmental sustainability. Nathaniel [47] used the G7 as a sample to reassess the effect of bio-capacity on the ecological footprint. He found that bio-capacity increased the ecological footprints in Japan, the UK, the USA, Germany, Italy, and France, but not in Canada. With MINT countries from 1971 to 2017, Agbede et al. [48] used the panel pooled mean group, auto-regressive distributed lag modeling technique, and the Granger causality test to reevaluate this topic. They found that bio-capacity positively and significantly affected environmental degradation in the long run. Meanwhile, they also found that there is a one-way causal relationship running from bio-capacity to the ecological footprint. Furthermore, these findings above were also supported by Pata and Isik [49], Banerjee and Mukhopadhayay [50], Chu [51], and Shittu et al. [52]
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