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Factors That Influence Renewable Energy Technological Innovation in China: A Dynamic Panel Approach

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  • Zheng-Xia He

    (College of Economics and Management, Nanjing Forestry University, Nanjing 210037, China)

  • Shi-Chun Xu

    (Management School, China University of Mining and Technology, Xuzhou 221116, China)

  • Qin-Bin Li

    (Joint Institute for Regional Earth System Science and Engineering, Department of Atmospheric and Oceanic Sciences, University of California, Los Angeles, CA 90095, USA)

  • Bin Zhao

    (Joint Institute for Regional Earth System Science and Engineering, Department of Atmospheric and Oceanic Sciences, University of California, Los Angeles, CA 90095, USA)

Abstract

We examine the driving effects of various factors on technological innovation to renewables (TIRES), focusing on a set of 29 provinces in China, and apply a dynamic panel approach. China has become a leading player in research and development spending in renewables, and the dynamic panel estimators we use prove themselves to be suitable in handling the persistent effect on TIRES. The level of TIRES in the previous periods is positively and highly correlated with that in the current period and confirmed the need for a stable and consistent policy support for renewables. Electricity consumption is the most important driver for all renewables and wind energy, but the driving effect was weaker for solar energy and biomass. Research and development intensity is the most important driver for biomass, but is only the second most important driver for all renewables, solar energy and wind energy. Unexpectedly, electricity price has had significant negative impacts on TIRES, which reveals that lowering electricity prices will lead to higher innovation in renewables. The driving effect of renewable energy tariff surcharge subsidy is not significant, which means that Chinese subsidy policy has not played the desired role. The driving effect of installed renewable energy capacity is also minimal, which may be due to the fact that overcapacity will hinder TIRES in China. This paper may help policy-makers and the industry understand how to promote TIRES in China effectively based on these above influential factors.

Suggested Citation

  • Zheng-Xia He & Shi-Chun Xu & Qin-Bin Li & Bin Zhao, 2018. "Factors That Influence Renewable Energy Technological Innovation in China: A Dynamic Panel Approach," Sustainability, MDPI, vol. 10(1), pages 1-30, January.
    • Handle: RePEc:gam:jsusta:v:10:y:2018:i:1:p:124-:d:125820
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