Causality and Impulse Response on the Relationship between Energy Consumption and Environmental Pollution----A Case Study of Qingdao City

By employing principal component analysis, Granger causality test and impulse response function, this paper aims to investigate the dynamic relationship of energy consumption and environmental pollution, using Qingdao time series data set during 1985-2007. The result shows that energy consumption will result in environmental pollution with the impact of time lags because environment has certain bearing capacity itself. So we should deal with the pollution in time and make the pollution quantity always under environmental capacity.