Does electricity price reduction bring a sustainable development of business: Evidence from fine-grained industrial electricity consumption data in China

Abstract

This paper studies the impact of electricity price reduction policy on the economic activities and carbon emissions of different industries. Since 2018, the Chinese government has advocated reducing electricity price for industrial customers in order to alleviate the non-tax burden on businesses. Using monthly electricity consumption and user data from 2016 to 2019, we find that the electricity price reduction has significantly increased the industrial electricity consumption and users. Heterogeneity analyses show that the effect is greater in heavy polluted industries and industries in low and medium GDP regions. The results of threshold impact analysis show that the threshold value of heavy pollution industries was lower than that of general industry and commerce, while heavy pollution industries are more sensitive to electricity prices than general industries. Moreover, the reduction of electricity prices results in a higher percentage of carbon emissions growth in heavy pollution industries. Our result can also help the policymakers access the costs and benefits of electricity price reduction for industrial customers more accurately.