When Coal Meets Growth: Exploring the Interactive Impact of Energy Use and Economic Expansion on China’s Carbon Emissions

This study examines how coal consumption and economic growth jointly influence carbon dioxide (CO₂) emissions in China over the period 1990–2023. While previous studies typically assess the effects of energy use and economic growth separately, this study contributes by explicitly analyzing their interaction to reveal how economic development may alter the emissions impact of coal consumption. To ensure robust inference, a comprehensive econometric framework is employed that accounts for cross-sectional dependence, slope heterogeneity, and mixed orders of integration, followed by long-run estimation using Feasible Generalized Least Squares (FGLS). The results confirm a stable long-run relationship among the variables. Empirically, coal consumption exerts a strong positive effect on CO₂ emissions, indicating that a 1% increase in coal use raises emissions by about 1.89%, highlighting the dominant role of coal in China’s carbon footprint. Economic growth also increases emissions, though at a much smaller magnitude (0.24%). However, the interaction between coal consumption and economic growth is negative and statistically significant, suggesting that as China’s economy expands, the marginal emissions impact of coal consumption gradually declines. This finding provides evidence of an emerging decoupling mechanism, likely driven by technological progress, improvements in energy efficiency, and structural transformation toward cleaner production. By uncovering the conditional relationship between coal use and economic growth, the study offers new insights into the energy–economy–environment nexus in China. From a policy perspective, the results highlight the importance of accelerating coal reduction strategies while simultaneously promoting technological innovation, energy efficiency improvements, and the expansion of clean energy to support China’s transition toward low-carbon and sustainable economic development.