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Renewable energy investment in China's new demonstration cities: A quasi-natural experiment

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  • Ren, Jiazhen
  • Liu, Ying
  • Ren, Yida
  • Zhang, Ping

Abstract

Renewable energy investment (REI) plays a vital role in the country's transition toward a cleaner energy mix. To optimize environmental policy and enhance energy supply stability, China has implemented the New Energy Demonstration Cities (NEDC) initiative. This analysis utilizes panel data from China's A-share listed companies, spanning 2000 to 2023, and conducts a quasi-natural experiment on the NEDC initiative—viewed as a comprehensive policy intervention—to evaluate its impact on REI and explore the underlying mechanisms. The results show that NEDC policies significantly stimulate REI, leading to a 57.44 % increase in investment. Mechanism analysis reveals that these policies promote REI mainly by easing financing constraints, increasing government subsidies, and reducing information asymmetry. Heterogeneity analysis further indicates that the positive effects of NEDC policies on REI are more pronounced in non-state-owned enterprises and large firms. The findings offer important policy implications for advancing China's green, low-carbon, and sustainable development goals.

Suggested Citation

  • Ren, Jiazhen & Liu, Ying & Ren, Yida & Zhang, Ping, 2025. "Renewable energy investment in China's new demonstration cities: A quasi-natural experiment," Utilities Policy, Elsevier, vol. 96(C).
    • Handle: RePEc:eee:juipol:v:96:y:2025:i:c:s0957178725001110
    DOI: 10.1016/j.jup.2025.101996
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