Non-linear relationship between energy consumption transition and green total factor productivity: A perspective on different technology paths

Abstract

Currently, the energy consumption structure is changing from fossil energy consumption to renewable energy consumption. Therefore, it is important to investigate whether energy consumption transition can actually increase green total factor productivity (GTFP) and how to reconcile the relationship between energy consumption transition and GTFP through different technological paths. After measuring GTFP in 27 European Union member states using the Global Malmquist-Luenberger (GML) method, this paper analyzes the nonlinear relationship between energy consumption transition and GTFP with the use of panel threshold regression models, and the empirical results show that (i) the relationship between energy consumption transition and GTFP is inverse "N" type of nonlinear relationship. This indicates that the degree of energy consumption transition will only have a positive effect on GTFP if it is in an “appropriate range”. Either too high or too low a degree of energy consumption transition is not conducive to enhancing GTFP. (ii) The development of emerging technologies can help GTFP to be enhanced in the energy consumption transition. (iii) Improving the productivity of existing technologies does not improve GTFP in the energy consumption transition. The main conclusions and recommendations of this paper are: (i) Although the energy consumption transition is "green", it does not always have a positive impact on GTFP, and sometimes it even has a negative effect on GTFP. (ii) In the context of the energy consumption transition, governments should pay more attention to emerging technologies which are not based on fossil fuel as a production condition.