Green technology innovation and energy intensity in China

Abstract

This paper investigates the relationship between green technology innovation and energy intensity for 29 provinces in Mainland China from 1999 to 2010. Based on changes in energy intensity in the data, the provinces are divided into four groups: the conventional group, the gradational group, the contemporary group, and the low-carbon group. Industrial structure is included in the study because of its impact on energy intensity, thus avoiding the problem of omitted variable bias. The empirical results indicate that there is a negative, long-run, cointegrated relationship between energy intensity and green technology innovation. We also discover unidirectional causality from green technology innovation to energy intensity in the conventional and low-carbon groups, whereas green technology innovation directly affects energy intensity through a feedback system for the gradational and contemporary groups. To achieve the goal of energy intensity, policymakers should encourage green technology diffusion from the low-carbon group to the conventional group and improve the share of green technology innovation in the gradational and contemporary groups.