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

Zheng-Xia He,Shi-Chun Xu,Bin Zhao,Qin-Bin Li

doi:10.3390/su10010124

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.

Highlights

The Paris Agreement on the climate change came into effect on 4 November 2016
The reports issued by Renewable Energy Policy Network for the 21st Century (REN 21), International Energy Agency (IEA) and United Nations Environmental Programme (UNEP) have pointed out that no targets in response to climate change can be realized without the development of renewable energy, and the basic trend of the global energy transformation is realizing the transition from fossil-based energy
We have contributed to the research in this field in three aspects: (i) we add empirical research on driving factors towards TIRES, emphasizing the difference for separate sources of renewable energy; (ii) we show the relative importance of different factors; and (iii) Employing a dynamic panel approach to analyze the persistent TIRES process is new in literature

Summary

Introduction

As the global institutional arrangement to reduce greenhouse gas emissions significantly in response to climate change action after 2020, the Paris Agreement will become the watershed in the development of global energy development [1]. More than 90% of the parties to the Paris Agreement have set their own renewable energy targets in their Intended Nationally Determined Contributions (INDC) in response to climate change. The reports issued by Renewable Energy Policy Network for the 21st Century (REN 21), International Energy Agency (IEA) and United Nations Environmental Programme (UNEP) have pointed out that no targets in response to climate change can be realized without the development of renewable energy, and the basic trend of the global energy transformation is realizing the transition from fossil-based energy.

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Discussion

Conclusion