China's post-pandemic energy rebound and climate targets under the current regulations and green innovation capacity

During the pandemic, China observed a minimum decline in energy demand and carbon dioxide emissions among major economies. Infact the post-pandemic trajectories show a significant rebound, raising concerns over its ability to achieve climate pledges. Thus, using annual data from 1990 to 2020, this study empirically examines the effect of environmental regulations on China's low-carbon economy through a clean energy transition with potential implications for China's economic growth. Assuming the asymmetries in the effect, the Quantile based Auto-Regressive Distributed Lag model is used for long- and short-run analysis. The study finds that the stricter environmental regulations are paying off the country economically and environmentally with some short-term adjustments. However, owing to continued growth-intensive policies, renewables are unable to catch-up with the country's growing energy demand despite a remarkable increase. Thus, the country must rely on fossil fuels (especially Coal) unless further policy reforms are made to achieve breakeven. With a significant positive effect on GDP and a negative effect on carbon emissions, green innovation helping China in reducing the trade-offs between environmental and development sustainability. Moreover, imports help in developing green technologies while exports remain a significant factor in the country's GDP. In a nutshell, China needs stricter environmental regulations to achieve climate commitments.