Inhibit or promote: Nonlinear spatial impacts of renewable energy on economic growth in China

Renewable energy is the key to dealing with climate challenge. A pivotal concern for governments striving to coordinate economic growth with carbon emissions is whether renewable energy fosters economic expansion. This study examines the impacts of renewable energy on economic development by adopting nonlinear panel models and the spatial Durbin model. The results indicate a U-shaped relationship between renewable energy and economic growth, alongside a U-shaped pattern in the spatial spillover effects. The findings remain robust after a series of robustness tests. Notably, the influences of renewable energy on economic growth varies across different regions. In the central and eastern areas, both the direct and indirect impacts of renewable energy on economic growth present significant U-shaped traits. In contrast, in the northeastern and western regions, the direct effect of renewable energy on local growth is limited, while the spatial spillover effects are positive and insignificant. We also found that industrial structure and energy intensity act as positive and negative moderators, respectively, in shaping the U-shaped relationship between renewable energy and economic growth. Based on the findings of this study, we propose a series of policy for promoting the transition to a sustainable and economically efficient energy system.