Spillover effect of energy intensity targets on renewable energy consumption in China: A spatial econometric approach

Abstract

China is under enormous pressure to control its energy consumption and carbon emissions and is working to drive energy intensity reduction and renewable energy transition through energy intensity targets management. To examine the effectiveness of energy intensity targets on renewable energy, a two-regime spatial Durbin model and the spatial lag of the X model were employed to examine inter-provincial energy intensity targets’ strategic interaction and their impact on renewable energy consumption based on provincial panel data from 2006 to 2019. The results indicate that a “race to the top” strategic interaction exists among provincial governments when setting energy intensity targets. Energy intensity targets in local and neighboring provinces significantly promote renewable energy consumption, but further analysis indicates regional heterogeneity; that is, energy intensity targets in resource-rich and non-resource-rich areas exhibit positive and negative impacts, respectively, on renewable energy consumption. Additionally, energy intensity targets increase renewable energy consumption by optimizing energy outcomes and encouraging green innovation. These empirical results suggest several lines of conduct for decision-makers.