Achieving sustainability and energy efficiency goals: Assessing the impact of hydroelectric and renewable electricity generation on carbon dioxide emission in China

This study examines the relationship between total renewable electricity generation, total hydroelectric generation, and carbon dioxide emissions (CO2e) for China. The autoregressive distributed lag (ARDL) model showed that renewable electricity generation, hydroelectric generation, and green innovation decreased CO2e in China from 1990 to 2018, whereas gross domestic product per capita and foreign direct investment increased CO2e. Moreover, the Granger-causality test results are as follows. First, a two-way causal flow from CO2e to foreign direct investment and CO2e to gross domestic product per capita confirmed the feedback hypothesis. Second, a one-way causal flow from hydroelectric and renewable electricity generation to gross domestic product per capita supported the energy-led growth hypothesis. Third, the causality test reflected a one-way causal flow from renewable electricity generation to foreign direct investment and hydroelectric generation to foreign direct investment and renewable electricity generation. This study asserts the need for government to introduce taxes and other incentives for solar, wind, and hydropower-related projects. The paper also calls for designing policies to improve the market attractiveness of hydroelectric generation projects through special investment programs.