The Impact of Environmental Regulation on Green Energy Technology Innovation—Evidence from China

Abstract

Green energy technology innovation (GETI) is a crucial path to achieve sustainable development. However, few studies have examined the determinants of GETI, especially from the perspective of environmental regulation. To fill this gap, this study investigates the impact of environmental regulation on GETI using the panel data of 30 provinces in Mainland China from 2001 to 2018. We first measure GETI by the latest IPC codes and patent data, and then adopt a dynamic spatial Durbin model (DSDM) to examine the relationship between environmental regulation and GETI. The main conclusions are summarized as follows: (1) There is a significant inverted U-shaped relationship between environmental regulation and GETI; (2) heterogeneity analysis shows that the inverted U-shaped correlation not only exists between environmental regulations and different types of GETI, but also exists between environmental regulations and GETI in different regions. Moreover, the results also show that the spatial spillover effect and path-dependent effect exist in all cases. The findings can provide reference for policymakers to formulate more precise environmental policies. That is, environmental policies in a province should be formulated based on its position on the inverted U-shaped curve. More specifically, when it is on the left side of the inflection point, it is reasonable to strengthen environmental policies, and when it is on the right side of the inflection point, appropriate relaxation of environmental policies should be considered.