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There is no consensus about the impact of urbanization on energy efficiency. We seek to fill this gap in literature using data from 78 countries for the period of 1995 through 2012. Extending the Stochastic Impacts by Regression on Population, Affluence, and Technology model, we identify the impact of urbanization on energy consumption and efficiency. Results of generalized method of moments estimation indicate that the process of urbanization leads to substantial increases in both the actual and the optimal energy consumption, but a decrease in efficiency of energy use. In addition, we find that the extent to which energy inefficiency correlates with urbanization is greater in countries with higher gross domestic product per capita.

Foreign direct investment (FDI) may have a positive effect on the level of pollution in host countries, as described by the pollution haven hypothesis (PHH). However, this kind of effect may depend on the economic conditions in host countries. In this study, we conduct research on the FDI's effect on China's CO 2 emissions during the market-oriented reform. The results are as follows. Firstly, FDI directly promotes China's CO 2 emissions. Secondly, with market-oriented reform, this positive effect from FDI is lowering year by year, which indicates that the market-oriented reform could alleviate the positive effect of FDI on China's CO 2 emissions. Thirdly, as China's market-oriented reform was implemented gradually from experimental zones to the whole country, regional market development is uneven, and as such so is FDI's effect on local CO 2 emissions. Provinces in the eastern area generally evidenced higher market development and lower CO 2 emissions from FDI, while four provinces in west area evidenced both lower market development and higher CO 2 emissions from FDI.

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