Journal of Chemical and Pharmaceutical Research (ISSN : 0975-7384)

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Original Articles: 2014 Vol: 6 Issue: 5

Energy efficiency and investments in low-carbon economy: The impact of carbon finance on sustainability development


In recent decades, the energy consumption growing faster with China's rapid economic grows. However, the energy efficiency in China is still at a low stage, so that how to improve the energy efficiency has become an important concern. Low-carbon economy requires changing the present situation of high energy consumption, and improving energy efficiency through the energy structure optimization and innovation. In this paper, we first construct an endogenous growth model and try to find out what is the main factor that effect on low-carbon economy growth. Then, using vector auto-regression model to test how financial development will effect on energy efficiency. The results prove that financial development can certain explain the improvement of energy efficiency, so that in the long run, financial development is the main factor to improve energy efficiency.