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Would environmental regulation improve the greenhouse gas benefits of natural gas use? A Chinese case study

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  • Zhao, Jun
  • Jiang, Qingzhe
  • Dong, Xiucheng
  • Dong, Kangyin

Abstract

Along with rapidly increasing natural gas consumption and carbon dioxide (CO2) levels and the gradually strengthening environmental regulation, further investigation of the emission-natural gas-environmental regulation nexus in China is particularly useful for mitigating the country's CO2 emissions. To empirically investigate whether environmental regulation improves the greenhouse gas benefits of natural gas use in China, this study investigates the causal relationships among CO2 emissions, natural gas consumption, and environmental regulation in China, based on panel data of China's 30 provinces covering 2005–2015. Fully considering the potential cross-sectional dependence, the system general method of moments (SYS-GMM) estimation method is utilized. The empirical results reveal that: (1) Environmental Kuznets curve (EKC) hypothesis for CO2 emissions is valid in China; (2) environmental regulation will not only directly affect CO2 emissions, but also indirectly affect CO2 emissions by influencing the energy consumption structure; (3) environmental regulation cannot significantly improve the greenhouse gas benefits of natural gas use, as environmental regulation in China can indirectly reduce CO2 emissions by decreasing coal consumption rather than increasing natural gas consumption; and (4) the causality analysis for three regions confirms the existence of significant regional differences. These findings offer several targeted policies for reducing CO2 emissions and promoting growth in the natural gas industry in China.

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  • Zhao, Jun & Jiang, Qingzhe & Dong, Xiucheng & Dong, Kangyin, 2020. "Would environmental regulation improve the greenhouse gas benefits of natural gas use? A Chinese case study," Energy Economics, Elsevier, vol. 87(C).
    • Handle: RePEc:eee:eneeco:v:87:y:2020:i:c:s0140988320300517
    DOI: 10.1016/j.eneco.2020.104712
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    More about this item

    Keywords

    CO2 emissions; Environment regulation; Natural gas consumption; Energy consumption structure; Direct and indirect effects;
    All these keywords.

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • Q38 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Government Policy (includes OPEC Policy)
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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