Policy, technical change, and environmental efficiency: Evidence of China's power system from dynamic and spatial perspective

Abstract

Feed-in tariff (FIT) and renewable portfolio standard (RPS) policies have been implemented to facilitate wind and solar power technologies with the aim of achieving sustainable development in power system. It is essential to study how efficient these policies are in accelerating technical progress and how efficient the power system is in balancing development and environmental protection. Dynamic network data envelopment analysis and the global Malmquist productivity index are first employed to study the environmental efficiency and technical progress, after which a dynamic spatial Durbin model is applied to analyze the impact of policies on technical progress. The results reveal that both FIT and RPS lead to technical progress which is the main driving force in environmental efficiency improvement, but that RPS performs better than FIT. From a spatial perspective, the adjacent regions usually show similar characteristics in technical progress. Therefore, future policy design should carefully consider the regional agglomeration effects and should effectively strengthen the implementation of RPS policy.