Role of Peer Effects in China's Energy Transition: Evidence from Rural Beijing.

Abstract

China's efforts to encourage energy transition from coal to cleaner methods of space heating have gained great achievement. However, not all progress met expectations; that is, some households still rely on solid fuel. Sociocultural factors provide one plausible explanation. While existing studies have examined and quantified the socioeconomic factors, little attention has been paid to the peer effects that are often critical in the Chinese cultural context. This study first presents household energy consumption patterns using household-level data on the coal-switching program in rural Beijing. It shows that the coal-switching program did not completely eliminate the use of solid fuel for space heating as expected. To explore the underlying determinants, we apply an econometric model of the forces driving energy transition, focusing on peer effects. The results confirm that the coal-switching program significantly reduces the use of solid fuel. Moreover, it reveals that the peer effect, measured by the average village-level solid fuel use rate, matters for households' fuel choices. We also find that the peer effect varies with different income levels and policies. These findings provide new evidence and insights for future policy design.