Energy Price Distortions and Urban Carbon Emission Efficiency: Evidence from China’s Energy-Intensive Sectors

Abstract

With a primary focus of achieving carbon neutrality, the energy-intensive industrial sectors (EIIs) contribute to more than half of China’s carbon dioxide (CO2) emissions. During the process of China’s rapid economic development, distorted energy prices gradually became the main obstacle to energy conservation and emission reductions in the EIIs. Therefore, this study focused on determining the mechanisms affecting the energy price distortions of carbon emission efficiency (CEE) in China’s EIIs. Based on a stochastic frontier analysis, the changing trend of CEE in China’s EIIs was evaluated. The channels impacting the energy price distortions of CEE were further analyzed by a mediating effect and moderated mediating effect model. The main contributions and findings include the following: energy price distortions have a significant negative impact on CEE by suppressing technological innovations and hindering the restructuring of energy consumption; governmental environmental regulatory policies mitigate their suppressing effect on technological innovations and reduce the preventing effect by improving the energy consumption structure. The results suggest that market-based price reforms and moderate environmental regulation by the government could help to improve CEE in China’s EIIs. These findings are of great significance for promoting the sustainable development of the energy-intensive industrial sectors and achieving carbon neutrality.