2. The Impact of Oil Prices on CO₂ Emissions in China: A Wavelet Coherence Approach

This paper observes the possible co-movements of oil price and CO₂ emissions in China by following wavelet coherence and wavelet partial coherence analyses to be able to depict the short-run and long-run co-movements at both low and high frequencies. To this end, this research might provide the current literature with the output of potential short-run and long-run structural changes in CO₂ emissions upon a shock (a change) in oil prices in China together with the control variables of world oil prices, fossil energy consumption and renewable consumption and urban population in China. Therefore, this research aims at determining wavelet coherencies between the variables and phase differences to exhibit the leading variable in potential co-movements. By following the time domain and frequency domain analyses of this research, one may claim that the oil prices in China have considerable negative impact on CO₂ emissions at high frequencies for the periods 1960–2014 and 1971–2014 in China. Besides, one may underline as well other important output of the research exploring that the urban population and CO₂ emissions have positive associations, move together for the period 1960–2014 in China. Eventually, this paper might suggest that authorities follow demand-side management policies considering energy demand behavior at both shorter cycles and longer cycles to diminish the CO₂ emissions in China.