Sustainable environment, energy and finance in China: Evidence from dynamic modelling using carbon emissions and ecological footprints

The excess utilization of conventional energy sources and their impact on environmental degradation have compelled emerging economies to explore alternative sustainable energy sources in order to protect the environment. This study investigates the impact of sustainable finance (market capitalization) and other sustainable economic factors (exports, energy consumption, economic growth, and urbanization) on both carbon emissions/greenhouse gases emissions) and ecological footprints in China from 1970 to 2017. Considering the Environmental Kuznets Curve perspective, a novel Dynamic Autoregressive Distributed Lag technique is applied. This model is efficient enough to draw actual positive and negative simulations, while showing the change of independent variables and their impact on the dependent variable. The empirical results of this study indicate that sustainable finance exerts a positive and negative influence on carbon emissions in the long- and short-run, respectively. Likewise, the results are robust with ecological footprints through which it is evident that sustainable finance placed a lucrative cause to preserve the environment. Outcomes of additional predictors state that in the long-run, sustainable economic factors (urbanization) capture a positive impact on carbon emissions, while others, such as economic growth, energy consumption, and exports improve environmental quality. Conversely, short-run results state that urbanization supports the environment. Still, economic development, energy use, and exports tend to damage the environment, exerting a positive impact on CO2 emissions in China. The policy implications from this study can be very useful in accomplishing the widely stated global sustainable development and environment goals. Keywords: Sustainable environment, energy and finance, market capitalization, Carbon/CO2 emissions, ecological footprints, DARDL, China.