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China’s Energy Transition and Economic Growth: A National and Sectoral Level Analyses

2019-04-18

Content introduction:

No. E2019004

China’s Energy Transition and Economic Growth: A National and Sectoral Level Analyses

 

Dong Wang, Ben White, Amin Mugera

 

 

Abstract:

This paper investigates the relationship between economic growth and energy transition in China based on the provincial level panel data for the period 2000 to 2012. The energy transition is measured by the share of low-carbon energy consumption in the total energy mix and per capita GDP is an indicator of economic growth. The stylized facts show that the pattern of China’s energy transition varies at different stages of development and varies in terms of different sectors. We apply static models (Fama-MacBeth, OLS, fixed effect) and dynamic models (difference and system GMM) for the national and four sectoral level data- industry, agricultural, service and residential sectors. At the national level, we find a U-shaped curve relationship between energy transition and economic growth; but at the residential level, it is an inverted-U curve. The relationship in the agricultural sector is ambiguous; while in the industry and service sector, energy transition is independent of economic growth. Moreover, energy price, natural resource endowment, environmental policy, and technology are found to influence China’s energy transition though to different degrees. The energy transition pattern significantly shifted from 2005 when the National Energy Transition Initiatives launched. It indicates that such industrial policy is effective to promote energy transition and the energy market reform can remove the friction or distortion to facilitate China transitioning to a low-carbon and sustainable development trajectory.

 

Keywords:

Energy transition; Economic growth; EKC, Energy ladder; Carbon lock-in

JEL Codes: Q40; Q48; O13; Q56;

 

 

The series of New Structural Economics Working Papers aims to encourage academic scholars and students from all over the world to conduct academic research in the field of new structural economics. Excellent papers are selected irregularly and are offered academic suggestions and recommendation, but the published working papers are not intended to represent official communication from INSE.

The Present Paper was approved by the D2 NSE Energy and Environmental group.