The contribution of clean energy consumption and production to sustainable economic development: New insights from the PSTR model

Massive consumption of fossil fuels has posed significant threat to sustainable development. Therefore, clean energy is an urgent requirement for sustainable economic development (SED). There is no comprehensive assessment of the relationship between clean energy and the SED, signifying a research gap in understanding the non-linear effects between them. This study fills this gap by calculating the SED index for China and using a panel smoothed transformation regression model. The findings reveal that the impact of clean energy development and utilisation on SED is characterised by non-linearity, which manifests in two key aspects: (1) Clean energy consumption (CEC) positively influences SED, with its impact strengthening alongside improvements in industrial structure optimisation and economic growth. Notably, the threshold values for the industrial optimisation level, industrial structure level, and economic development are 1.0390, 0.4667, and 43730, respectively. (2) The relationship between clean energy production (CEP) and SED follows a U-shaped curve; once economic development surpasses 38,588 units, CEP transitions from a negative to a positive influence on SED. This study provides valuable insights into comprehensive measurement of SED, offering guidance for countries worldwide to formulate context-specific energy policies aligned with their respective industrial structures and stages of economic development to foster SED growth.