Abstract
Environmental regulations are the key measure by which governments achieve sustainable environmental and economic development. This study aimed to determine the direct and indirect impacts of environmental regulations on total factor energy efficiency of regions in China. Since regions have different levels of economic development and resource endowment, we used the slacks-based measure (SBM)-undesirable model to calculate total factor energy efficiency considering regional technology heterogeneity and examined the regional impacts of environmental regulation on this efficiency using the Tobit regression model. A positive direct impact was generated in the eastern region of China by the forced mechanism, which forced enterprises to reduce fossil fuel energy demand and increase clean energy consumption; whereas a negative direct impact was generated in the middle and western regions owing to the green paradox, which is the observation that expected stringent environmental regulation prompts energy owners to accelerate resource extraction. Moreover, indirect impacts through technological progress and foreign direct investment were taken into account in the model, and the results show that the indirect impacts vary across regions. A logical response to these findings would be to develop different policies for different regions.
Highlights
Since its reform and opening up to the outside world, China has been in the process of accelerating industrialization and urbanization, and it has achieved remarkable results
Indirect impacts through technological progress and foreign direct investment were taken into account in the model, and the results show that the indirect impacts vary across regions
Notice that xn is the inputs of the n-th decision making units (DMUs); yn is the desirable outputs of the n-th DMU; ybn is the undesirable outputs of the n-th DMU
Summary
Since its reform and opening up to the outside world, China has been in the process of accelerating industrialization and urbanization, and it has achieved remarkable results. It is undeniable that this kind of high-speed growth is based on high energy consumption. China’s energy consumption increased from 571,440,000 tons of standard coal in 1978 to 4,300,000,000 tons of standard coal in. 2015, which has had huge environmental consequences. This extensive economic growth deteriorates the environment, and restricts future sustainable development of China’s economy and society. As the world’s largest consumer of energy, it is imperative for China to implement an energy efficiency strategy to meet the needs of its own development and the requirements of the international community. Determining how China’s environmental regulation affects its energy efficiency and exploring a balanced development model of energy efficiency improvement and environmental protection have both abstract and practical implications
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