Impacts of carbon emission trading schemes on the development of renewable energy in China: Spatial spillover and mediation paths

Abstract

A carbon emission trading scheme (ETS) generally applies to the energy sector and energy-intensive industries. The basic goal of an ETS is to promote green and low-carbon development. Based on the panel data of 30 provinces in China, taken from 2006 to 2018, this paper analyzes the impact of ETSs on the development of renewable energy. A spatial Durbin model (SDM) is used to explore the spatial spillover effects of China's ETS on the development of renewable energy. Then, a multiple mediation model is applied to explore the specific paths through which China's ETS affects the development of renewable energy. The results show that the implementation of China's ETS inhibits the development of renewable energy in the policy implementation areas. However, the development of renewable energy in neighboring areas will be promoted. In addition, the spatial spillover effect is greater than the direct inhibition effect, so the overall effect is promotion. Furthermore, ETSs can affect the development of renewable energy by following multiple mediation paths, including fossil energy consumption, energy intensity and green technology innovation. Fossil energy consumption is the most critical transmission mechanism through which China's ETS affects the development of renewable energy, playing a 73% role in the overall mediation effect. The mediation effect of energy intensity and green technology innovation only accounts for 27%.