The Impact of Environmental Regulation on the Innovation and Diffusion of Low-Carbon Technology in Energy Sector

Abstract

The issue of climate change caused by GHG is increasingly serious. As the main emission source, the energy sector has promising potential for emission reduction. In the context of low-carbon technology transition in China’s energy sector, this paper uses panel data of 30 provinces from 2000 to 2017, totally 297,721 patent data, and empirically examines how environmental regulation affects regional energy low-carbon technology innovation and diffusion under the framework of the "Porter Hypothesis". In addition, regional heterogeneity is also considered and the sub-samples of eastern, central and western regions were studied separately. The conclusions show significant heterogeneity in regions. The eastern region, which is less dependent on industries with high emissions and energy consumption, environmental regulation does not affect the innovation and diffusion of low-carbon technology in the energy sector. With the increasing intensity of environmental regulation, only the diffusion of low-carbon technology in the central region has been significantly improved, indicating that this region mainly adopts the introduction and learning of existing low-carbon technologies to meet the demand of emission reduction. Under the circumstances of high risk, uncertainty, sunk cost and opportunity cost brought by low-carbon energy technology, covered companies in western region are more inclined to relocate limited resources to schemes rather than low-carbon innovation.