Is cleaner more efficient? Exploring nonlinear impacts of renewable energy deployment on regional total factor energy efficiency

Abstract

Improving the deployment and penetration of renewable energy is considered to be the fundamental way to solve environmental problems, but whether higher penetration of renewable energy means higher energy efficiency remains to be empirically tested. To reveal the relationship between cleanliness and efficiency in the energy sector, this paper first uses the three-stage data envelopment analysis (DEA)method to measure the total factor energy efficiency (TFEE) of 30 provinces in China, and then applies static and dynamic panel threshold regression (PTR)models to estimate the nonlinear effect of renewable energy share on TFEE. The results show that renewable energy is usually beneficial for improving TFEE, but there are prominent heterogeneity and nonlinear characteristics in net electricity exporting and net electricity importing provinces. Renewable energy in low rather than high regimes can significantly improve energy efficiency, indicating that provinces with lower levels of economic development and energy consumption receive higher marginal energy efficiency and are more likely to achieve sustainable development goals. More renewable energy quotas should be given to economically developed and high energy consuming provinces, and comprehensive energy efficiency guarantees and improvement measures must be provided to achieve optimal emission mitigation.