Global warming is basically a result of enormous carbon secretions in the ecosystem as a result of large-scale human activities to develop society economically and socially (Barro, 1996). It happens due to considerable dependence on the usage of non-renewable fuels (oil, coal, and natural gas) by nations all around the world for their mechanization efforts, urbanization, and demographic burdens. In the situation of absence of global harmony to pledge to the adaptation and moderation approaches by industrialized and emerging economies to steady the greenhouse gas effects due to carbon discharges and handle the unfriendly environmental filths and climate deviations underneath a mutual international agenda. The administrations of different nations in their own capabilities are making their progress and exerting energies to alleviate and shrink the menace of global heating, thus curtailing the natural susceptibilities linked with recurrent natural calamities (Marshall and Marshall, 1920). In order to accomplish such objectives, the nations are more determinedly accepting new environmental tactics and setting up monitoring rules for altering their scheme of energy consumption and trusting more on clean and green energy sources as compared to traditional energy sources and aiming to be more accommodating with sustainable environmental ethics by means of more sophisticated technologies in their manufacturing and consumption process. Among numerous policy schemes that the nations are implementing, the most effective one is to take environmental awareness among people of the society and it can be attainable by educating the people on the harmful effects of global warming. Moreover, social rules and ethical preaching are important tools that can guide the people to a substantial degree for improved ecological balance from its further worsening (Gylfason, 2001).
Though social preaching and developing ethical rules are important to limit environmental degradation further. However, the role of higher education is not only imperative for the process of wealth creation of a nation but also for specific sections of the economy. For instance, the energy sector is one of the several ways by means of which higher education plays a vital role in the development of the economy. With the evolution of higher education institutions more and more local and international students are attracted to these institutes which require more educational infrastructure and, push the energy demand further (Gossling, 2002 and Becken et al. 2003). Moreover, as the number of students, local and international, increase along with the total number of educational institutions energy demand will rise due to increased business and economic activities such as more hotels and hostel will develop, more transportation facilities, saloons, and dry cleaning services, etc. will be required. Consequently, though higher education expansion benefits the whole economy through various segments, it also contributes to a longstanding increase in energy demand. This points out the significance of implementing effective energy management strategies in order to attain energy preservation and environmental security. Augmented energy demand will increase in energy expenses by homes and businesses, which as a result will lead to an upsurge in the total income of the nation (Katircioglu, 2014). Hence, researchers need to pay more attention to the association between educational progress and energy consumption
In the conceptual framework, knowledge can affect energy consumption in two different ways i.e. the income and technology effects. The endogenous growth concept suggests that amassing of knowledge or education serves as a catalyst in aiding maintainable economic growth (Benos and Zotou, 2014). Though the findings from the energy-growth literature are inconclusive, sufficient empirical proof has recommended a positive linkage between energy demand and economic growth in several countries (Ozturk, 2010). In this backdrop, rising energy demand may have been pushed by rising income and the rise in income is a result of heavy investment in human capital or in other words education. On the other hand, it is significant to mention that knowledge buildup also allows swapping to technology that is much more energy-efficient, plummeting energy demand in the course (Li and Lin, 2016). Apart from the above-mentioned two effects, the third channel is the production function through which knowledge can affect the energy consumption if the link between physical assets, knowledge, and energy inputs is established (Salim et al., 2014 and Pablo-Romero and Sánchez-Braza, 2015). Precisely, if both human capital and energy inputs are interchangeable in the process of manufacturing, then human-capital amassing successfully decreases energy demand, while keeping the whole output static (Arbex and Perobelli, 2010).
Financial inclusion enhanced human welfare and reduced the poverty level but it also has a favorable impact on energy consumption (Bukari and Koomson, 2020 and Dogan et al. 2021). Financial inclusion enhances household and individuals welfare through the household facilitation for efficiency gains, household enterprises, health, and education (Stein and Yannelis, 2020). Financial inclusion affects energy consumption levels through household incomes, health, education, inequality, economic growth, labor efficiency, and energy efficiency. Financial inclusion enhances the level of income that directly influences the consumption level of households (Demirguc-Kunt et al., 2017). The study done by Sadath and Acharya (2017) denotes that financial inclusion affects energy poverty through changing the income level of households, inequality, and poverty. Financial inclusion enables individuals to securely and effectively perform financial transactions. An increase in financial inclusion and credit facilities can facilitate the household for investing in microenterprises, health, and education that increase occupational and labor incomes in the long-run (Kuada, 2019).
The developments in labor incomes, health, and education due to financial inclusion may enhance occupational incomes that enable households to afford energy services. Financial inclusion enhances economic growth through mobilization of investment and savings in the product segment and decreasing transaction expenses, contracting, and information across the economy that results in efficiency gains which significantly influences income levels of poor households (Sharma, 2016). Financial inclusion influences the energy consumption level through the channel of economic growth. Financial inclusion stimulates energy efficiency through market development and financing for scalable and affordable clean energy products specifically for household purposes in developing economies (Boutabba et al., 2020). Access to modern and clean energy sources through financial inclusion promotes the efficiency of renewable and non-renewable energy consumption (Koomson & Danquah, 2021).
China’s remarkable growth over the preceding three decades was escorted by enormous upsurges in energy consumption. Certainly, since 2009 China has substituted the USA as the world’s principal energy demander. In 2014 China used 4,260 million tons of typical coal equivalent energy. Hence, recognizing the elements behind China’s unsaturated energy demand is ideal to predict its energy requirement and energy safety in the forthcoming (Lei et al. 2021). To date, a number of studies are available with regards to energy demand in China, and the majority of them aimed to find the impact of energy demand on economic growth (Yuan et al., 2008 and Bloch et al., 2015). Despite its catalytic part in encouraging economic growth, only a few researchers have scrutinized the influence of human capital, knowledge, or education on energy demand in the existing literature. According to Pachauri and Jiang (2008), the more educated the people of the society will be, the more will be the demand for energy-efficient electric appliances. Similarly, Broadstock et al. (2016) observed that more education will lead to less energy consumption due to more emphasis on energy efficiency.
Against this backdrop, we have asked a very pertinent question with regards to energy consumption in China: Does education really affect the consumption of energy in China?. Does financial inclusion cause energy consumption? Then, we also want to see whether the higher level of education really pushes the people towards more energy-efficient products or otherwise. The selection of China is not random, rather based on the fact that it is the largest consumer of energy in the world, hence, it can serve as an ideal country for examining the knowledge-energy nexus. Therefore, this study is a novel from three different aspects. To our knowledge, no study is available in the existing literature that has given special attention to a country like China with regards to the financial inclusion and education-energy consumption nexus. Last but not the least, this analysis is based on time series data which is free from any sort of aggregation bias.
In this study, we will see various sections. The second section consists of the econometric model and the technique we apply to get the estimates. In the third section, the findings of the study are discussed in detail. Lastly, we conclude our study in section five.