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Research on the Nested Structure and Substitution Elasticity of China’s Power Energy Sources

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  • Shan Wang

    (School of Economics, Beijing Wuzi University, Beijing 101149, China)

  • Keyu Zhang

    (School of Economics, Beijing Wuzi University, Beijing 101149, China)

Abstract

In alignment with China’s “carbon peak and carbon neutrality” goals, carbon reduction and energy structure transformation are central priorities. As a major emitter, the power industry plays a key role in this transition, and identifying effective pathways for its green energy transformation is essential to driving broader industrial green transformation and ensuring sustainable development. This article calculates the elasticity of substitution between clean and non-clean energy within China’s power sector from 1993 to 2021, employing the kernel density estimation method. By further comparing the goodness-of-fit across various nested structures of clean energy sources, the study identifies the optimal internal nested structure and examines the interactions among its components. The results underscore two key insights: on the one hand, a robust substitutive relationship exists between clean and non-clean energy, with the substitution elasticity of 1.646, exhibiting pronounced regional heterogeneity characterized as “weaker in the east and stronger in the west”; on the other hand, the optimal nested structure of clean energy is identified as (hydropower + nuclear power)—wind power—solar power. In this structure, the elements display a substitutive relationship in the Eastern Region, while in the Western Region, they exhibit a complementary relationship.

Suggested Citation

  • Shan Wang & Keyu Zhang, 2025. "Research on the Nested Structure and Substitution Elasticity of China’s Power Energy Sources," Sustainability, MDPI, vol. 17(3), pages 1-22, January.
    • Handle: RePEc:gam:jsusta:v:17:y:2025:i:3:p:1098-:d:1579764
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    References listed on IDEAS

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