Decoupling of Electricity Consumption Efficiency, Environmental Degradation and Economic Growth: An Empirical Analysis

Abstract

The present study investigates electricity consumption, carbon dioxide (CO2) emission, and economic growth decoupling using data from 1971 to 2020 for the economy of China. The study uses decoupling analysis (DA) as the prime methodology for analysis. Furthermore, the findings put forward a significant contribution to an economic picture of the economy of China and a sizeable addition to related research and findings under the assigned issues discussed in the study. The study’s main contribution is to decouple electricity consumption from the gross domestic product (GDP), which is rare in the existing literature in the context of China. Moreover, the study shows the decoupling of environment affects electricity consumption, and GDP growth. The DA model shows that electricity consumption is the main driving force enhancing economic growth. However, industrialization has increased greenhouse gases, global warming, and climate change due to production and consumption. China’s economy uses coal for energy resources, which indicates that China produces a large proportion of electricity with coal, which causes high CO2 emissions. Finally, further analysis with the Granger causality test confirms the main findings.