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Is China's energy transition pace driven by the supply-side or the demand-side?

Author

Listed:
  • Wang, Hu
  • Wang, Feng
  • Liu, Juan
  • Ling, Rui
  • Zhang, Hao
  • Jiang, Hongfei

Abstract

This study empirically examines whether China's energy transition pace is primarily driven by supply-side or demand-side factors, focusing on the roles of energy investment in state-owned assets (EISA), environmental regulations, and marketization processes. Using spatial econometric models on panel data from 30 Chinese provinces (2008–2021), we identify distinct mechanisms on each side of the analysis. On the demand side, EISA reduces the share of fossil fuel consumption and mitigates marketization-induced fossil energy use, yet it weakens the effectiveness of environmental regulation. Stricter environmental regulations can reduce the consumption of fossil energy, further promoting cleaner energy use by positively moderating EISA and weakening the tangential effects of marketization. Although marketization initially stimulates fossil energy consumption, it ultimately enhances the effectiveness of environmental regulations and optimizes the allocation of EISA. On the supply side, EISA significantly promotes local new energy production. However, it generates negative spatial spillover effects and inhibits the development of renewable energy in neighboring regions. Environmental regulations promote new energy production most significantly in the eastern region of the country, but they also cause similar negative spillover patterns. Marketization processes suppress new energy production overall, with pronounced regional disparities. This study contributes empirical evidence regarding spatial spillovers and regional heterogeneity in China's energy transition process. The findings may provide a scientific basis for integrating synergistic development cross-regionally, as well as optimizing conjoined environmental regulations and market-oriented policies. This study further provides novel insights into the trajectory of China's energy transition at the regional level, complementing existing literature on spatial spillover issues.

Suggested Citation

  • Wang, Hu & Wang, Feng & Liu, Juan & Ling, Rui & Zhang, Hao & Jiang, Hongfei, 2026. "Is China's energy transition pace driven by the supply-side or the demand-side?," Utilities Policy, Elsevier, vol. 98(C).
    • Handle: RePEc:eee:juipol:v:98:y:2026:i:c:s0957178725002127
    DOI: 10.1016/j.jup.2025.102097
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    References listed on IDEAS

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