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Environmental regulation, capital output and energy efficiency in China: An empirical research based on integrated energy prices

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  • Zhang, Yixiang
  • Xiong, Yali
  • Li, Feng
  • Cheng, Jinhua
  • Yue, Xiaochen

Abstract

How to improve environmental quality and achieve high-quality development of economy have become important challenges for China in the new era. Based on the KLEMS framework, this paper analyzes the relationship between environmental regulation, factor substitution, and energy-saving effect by using panel structure vector autoregression model and panel data of China industry from 2004 to 2014. The following conclusions are drawn:(1) China's environmental regulation can promote the substitution of capital to energy, however, benefit of this substitution in the long run is greater than that in the short run. (2) Only in the long run can China's environmental regulations have significant energy-saving effect, technological innovation is the main reason for the improvement of energy-saving effect of environmental regulation. (3) China's environmental regulation will not significantly improve the structure of capital, which makes the economic benefits low. Finally, the paper discusses the possible ways to improve China's environmental regulation from the aspects of forming a scientific environmental supervision system, improving energy pricing mechanism and capital structure.

Suggested Citation

  • Zhang, Yixiang & Xiong, Yali & Li, Feng & Cheng, Jinhua & Yue, Xiaochen, 2020. "Environmental regulation, capital output and energy efficiency in China: An empirical research based on integrated energy prices," Energy Policy, Elsevier, vol. 146(C).
    • Handle: RePEc:eee:enepol:v:146:y:2020:i:c:s0301421520305449
    DOI: 10.1016/j.enpol.2020.111826
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