Exploring the moderating role of green investment in China’s energy production for ecological footprint reduction

Gan, Yong Jin and Leong, Justin Weng Seng and Liew, Simon Sai Mun (2025) Exploring the moderating role of green investment in China’s energy production for ecological footprint reduction. Final Year Project, UTAR.

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Abstract

This study investigates how green investment (GI) moderates the relationship between China’s energy production—both renewable (RE) and non-renewable (NRE)—and its ecological footprint (EFP) over the period 1990–2022. Drawing on annual data from the Global Footprint Network, International Energy Agency, and CEIC, we employ an autoregressive distributed lag (ARDL) bounds-testing framework to test for cointegration and estimate both long- and short-run dynamics. Our findings confirm a stable long-run relationship among EFP, energy production, GI, GDP, GDP2 , and population density. While GI and RE individually exhibit paradoxical positive effects on EFP—reflecting implementation costs and land-use impacts—the interaction term (REGI) significantly reduces EFP, supporting GI’s role as a moderator in expediting ecological benefits from renewable energy deployment. These results underscore the importance of policy measures that simultaneously scale green finance and renewable capacity, such as targeted subsidies, carbon pricing, and technology incentives, to maximize ecological gains and guide China’s transition toward sustainable energy production.

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