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Environmental regulation and energy investment structure: Empirical evidence from China's power industry

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  • Xie, Li
  • Li, Zexin
  • Ye, Xiuhua
  • Jiang, Yanru

Abstract

Investment structure optimization is important for achieving green development, and environmental regulation affects enterprises’ investment behavior significantly. This study divides environmental regulation into market-based and command-and-control policies. The latter is further divided into the formulation and implementation of policies. Using the Chinese power generation industry from 2007 to 2017 as a sample, we employ the system generalized method of moments (system GMM) to study the impact of environmental regulation on the energy investment structure and explore how differences in regions and environmental regulations affect the energy investment structure. The results show that although environmental regulation increased the proportion of investment in new energy power generation, different types and levels of environmental regulations affected investment in power generation differently. Stricter command-and-control environmental regulation policies at the formulation level increased the investment proportion of new energy power generation. However, the regional data show that different types and levels of environmental regulation affected the power generation investment structure in each region differently. Both command-and-control and market-based environmental regulation in China's central and western regions failed to play their role. Moreover, the implementation of command-and-control environmental regulation policies significantly influenced the direct increase in the proportion of new energy power generation in China's eastern region.

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  • Xie, Li & Li, Zexin & Ye, Xiuhua & Jiang, Yanru, 2021. "Environmental regulation and energy investment structure: Empirical evidence from China's power industry," Technological Forecasting and Social Change, Elsevier, vol. 167(C).
  • Handle: RePEc:eee:tefoso:v:167:y:2021:i:c:s0040162521001220
    DOI: 10.1016/j.techfore.2021.120690
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