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Shocks in green and conventional energy consumption and their impacts on economic growth: a revisit for China and India

Aparna Krishna, Kulsum Parween, Mohd Irfan

International Journal of Energy Sector Management

ISSN: 1750-6220

Article publication date: 10 January 2025

52

Abstract

Purpose

This study aims to argue that responses in economic growth (EG) resulting from positive and negative shocks in energy consumption could be a non-linear phenomenon. Thus, the study aims to investigate the existence of non-linear long-run effects of positive and negative shocks in green and conventional energy consumption on EG for China and India. By decomposing energy consumption in positive and negative shocks, the study seeks to determine the distinct impact of positive and negative shocks in energy (conventional and green) consumption on EG of China and India.

Design/methodology/approach

A non-linear autoregressive distributed lag (NARDL) model based on energy-augmented environment Kuznets curve (EKC) framework is used on annual time series covering the period 1965–2021. The study uses a precise econometric methodology, starting with unit root tests to assess stationarity, moving to the estimation of the NARDL model, which resulted in the calculation of long-run coefficients and error correction terms to analyse the rate of adjustment towards equilibrium.

Findings

The empirical findings demonstrate that there exists a non-linear cointegrating relationship among EG, carbon emissions and green and conventional energy consumption for both economies. In the long run, a non-linear impact of green energy consumption (GEC) on EG is evident for China only, whereas non-linear impact of conventional energy consumption (CEC) on EG is visible for both countries.

Practical implications

While China and India prioritise energy diversification by embracing green energy to promote energy security and limit rising carbon emissions, it is interesting to investigate how positive and negative shocks in GEC and CEC have affected their EG. Second, this paper examines the trade-offs between EG and GEC/CEC in China and India, two high-carbon emitters. The disparities in trade-offs may indicate how well each country’s energy policies address increased EG with fewer energy-induced carbon emissions.

Originality/value

This study examines non-linear cointegration among the variables of interest, whereas most prior studies have focused on linear cointegration. The existence of non-linear cointegration may suggest that positive and negative shocks in GEC and CEC can result in non-linear reactions in EG. Thus, it establishes a basis for examining the non-linear long-term effects of GEC and CEC on EG. The research findings indicate significant consequences and necessitate prompt intervention to alleviate the detrimental impacts of shocks in GEC and CEC on EG in China and India and provide several important inputs to address the inherent challenges of energy transition goals.

Keywords

Acknowledgements

The corresponding author would like to thank Indian Institute of Technology (Indian School of Mines) Dhanbad, Dhanbad (India) for providing required infrastructure to conduct this research.

Funding statement: No funding was received in the preparation of this study.

Conflict of interest: The authors declare that they have no known competing financial or non-financial interests that could have appeared to influence the work reported in this paper.

Data availability: Data will be made available on request.

Citation

Krishna, A., Parween, K. and Irfan, M. (2025), "Shocks in green and conventional energy consumption and their impacts on economic growth: a revisit for China and India", International Journal of Energy Sector Management, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/IJESM-09-2024-0050

Publisher

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Emerald Publishing Limited

Copyright © 2024, Emerald Publishing Limited

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