Does legislation promote technological innovation in renewable energy enterprises? Evidence from China

Abstract

Compared to industrial policy, the rule of law can better stabilize expectations and ensure long-term benefits. Based on the legal text analysis and the accurate identification of renewable energy enterprises, this study conducts a quasi-natural experiment under the provisions of the Renewable Energy Law of the People's Republic of China, officially implemented in 2006, to empirically test the impact of energy legislation on renewable energy enterprises' technological innovation. Energy legislation can drive technological innovation, manifesting in a dual upgrade of both quantity and quality of innovation in renewable energy enterprises. The aforementioned law promotes technological innovation by implementing legal responsibility, increasing economic incentives, encouraging new enterprises to entry, and cultivating human capital, thus proving it rational and effective. Additionally, it significantly enhances the innovation of upstream equipment manufacturers, the eastern China and southern power grid regions, enterprises belonging to local governments at the county level and below, foreign-invested enterprises, and private enterprises. This study not only provides empirical evidence that energy legislation can ensure innovation-driven green development but also offers a Chinese solution for sustainable global development.