Does carbon taxation make biofuel consumption sustainable to achieve green recovery?

Amidst global efforts to combat climate change, carbon emission taxation is vital in implementing sustainable recovery measures. This study examines whether China's transition to environmentally sustainable biofuels through carbon taxes can form an approach for achieving green revival after the COVID-19 pandemic, Focusing on the Chinese context. This study was carried out to test the impact of carbon tax policies on biofuel use in China. Data from 1990 to 2021 were examined using the Autoregressive Distributed Lag (ARDL) model. The short-term findings show that carbon taxation was positively correlated with a 30% increase in bioenergy consumption. However, this stabilizes at around 20% over the long term. The model based on ARDL shows that a one-unit increase in carbon tax is associated with a 0.75% reduction in carbon emissions–a significant environmental return. Intriguingly, the study also discovers that the positive effect of biofuel consumption on green economic growth. This research aims to achieve a harmonious equilibrium between environmental conservation and economic revitalization by emphasizing the correlation between carbon limitations and the transformational capacity of using natural resources to create a sustainable and environmentally-friendly future.