China's carbon-embedded growth trajectory is gradually becoming a burden to environmental sustainability, hence, requires much attention. The complexity of human capital attributed emissions coupled with fossil fuel inclined energy utilization for industrialization underscores the failure of China to meet its mitigation target. We developed a policy-driven conceptual tool based on disaggregate energy utilization, human capital, trade, income level and natural resource exploitation in a carbon and environmental degradation function. Using a battery of statistics and econometric techniques such as neural network, SIMPLS, U test, dynamic ARDL Simulations, and Prais-Winsten first-order autoregressive [AR(1)] regression with robust standard errors, we examined the theme based on a data spanning 1961-2016. The study demonstrates that fossil fuel energy consumption and human capital are conducive catalysts for climate change. The instantaneous increase in renewable energy, environmental sustainability and income level has a diminishing effect on emissions and environmental degradation. The environmental Kuznets curve (EKC) hypothesis is validated in both emissions and degradation function - at a turning point of US$ 5469.79 and US$ 5863.70, respectively. The study highlights that the over-dependence on fossil fuel energy and natural resources for economic development, carbon-intensive trade and carbon-embedded human capital, thwart efforts to mitigating climate change and its impacts. Thus, the onus of responsibility for achieving a cleaner environment in China depends majorly on governmental policies that favour or dampens environmental sustainability.

Significant progress has been made towards mitigating climate change and its impacts across countries. However, the transboundary effect of CO₂emissions means that excluding the actions and inactions of certain countries and territories that escalate emissions is alarming. On this note, we examined the heterogeneous contribution of immediate and underlying drivers of emissions across 206 countries and territories for the period spanning 1960–2018. We deployed a dynamic panel estimation technique that accounts for cross-sectional dependence, heterogeneous parameters across countries, and dynamic correlated effects—a constraint for socio-economic, consumption- and pollution-based models. A global accounting of economic policy and debt, population structure, density and urbanization, and environmental-related aggregate indicators in a carbon emission function is presented. The empirical results demonstrate that the overarching effect of the instantaneous increase in economic development, population dynamics and energy utilization stimulate global emissions at national, urban and household levels across countries and territories. Industrialization and trade were found to escalate global pollution levels due to the impact of carbonized and energy-intensive economic structure in many developing and developed economies. Urbanization, urban income growth, and urban energy consumption are intertwined, hence, the institution of urban-related policy interventions is likely to negate the trio-impact on environmental sustainability. The triple effect (exploitation of natural resources, production and consumption) of economic development spurs environmental pollution, thus, calls for structural change from a carbonized to a decarbonized economy. The complex interaction highlights diversification of the energy mix by the inclusion of clean and renewable energy sources, fossil fuel-switching, and modern technologies like carbon capture and storage to improve energy efficiency and decline emission intensities.

Using an event study methodology, we investigate how unexpected political events affect climate-sensitive sectors. We find that events related to climate change policy have significantly impacted returns. The clean energy sector benefitted from the Paris Agreement, Climategate, and Fukushima since these events increased climate change awareness and favor toward policies related to reducing the impact of climate change. For the utilities, energy-intensive, and transport sectors, these events imply increased transition-related political and market risks, which should be compensated. Events weakening climate change policy are associated with positive abnormal returns for the fossil energy sector. We further find that stock market investors are quick to adapt to new information related to climate change. Policymakers should be aware of such events' impact on the stock market because the investors are likely to price in both climate risk and expectation about sectors' growth.