How do green energy investment, economic policy uncertainty, and natural resources affect greenhouse gas emissions? A Markov-switching equilibrium approach

Energy efficiency has enormous potential for boosting economic development while simultaneously reducing greenhouse gas emissions. Energy efficiency improvements are widely accepted as a necessary corollary of China's decarbonisation efforts. This study analysed key factors in green energy investment and its determinants, i.e. natural resources and uncertainty of economic policy on greenhouse gas emissions, from 1987 to 2019. This work conduct a thorough empirical analysis and used innovative econometric techniques, such as the Markovswitching equilibrium correction model for long-run estimation and the kernel-based regularised least squares machine-learning approach, to establish the direction of causality for the variables in this study. The results indicate that green energy investment is significantly correlated with greenhouse gas emissions and helps to support environmental quality. However, although natural resources and economic policy uncertainty support economic growth, they are harmful to environmental quality. This conclusion implies that the Chinese government should exploit green energy investment to strengthen environmental performance as its long-term strategy.