Renewable and Non-Renewable Energy Consumption and Trade Policy: Do They Matter for Environmental Sustainability?

Abstract

In 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, this paper attempts to examine how renewable and non-renewable energy consumption, bio-capacity, economic growth, and trade policy dynamically affect the ecological footprint (a proxy for environmental sustainability). Using 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.