Abstract
Currently, oversupply coal and coal-based power in China poses a great challenge to energy structure optimization and emissions reduction. The energy industry, however, is closely linked to the financial sector. In view of this, using a non-linear Panel Smooth Transition Regression (PSTR) model, this paper examines the threshold effects of financial developments on energy supply structures for 17 energy supply provinces in China observed over 2000–2014. The main results are: (1) The ratio of coal supply (LCSR) specification is seen to be a four-regime PSTR model with added value in the financial industry/GDP (LFIR) as the threshold variable. The LFIR and LCSR show a positive correlation, and the elastic coefficients change between 0.02 and ~0.085; the impact of financial institutions’ loan balance/GDP (LLAN) on LCSR takes on an inverse U-shaped curve: first positive, then negative, and again positive with the financial crisis in 2008 as the turning point; (2) The ratio of thermal power generation (LTPG) specification is seen to be a two-regime PSTR model with investment in the coal industry/GDP (LCIR) as the threshold variable. Results show that LFIR has a negative effect on LTPG, and the coefficients in the low regime tend to be 0.344%, then gradually decrease to 0.051% in the high regime. The influence of LLAN on the LTPG is positive before and negative after the financial crisis. The influence of the foreign direct investment GDP proportion (LFDI, the degree of financial openness) on the LCSR and LTPG both remain negative. Therefore, in the process of formulating energy conservation policies and adjusting energy-intensive industrial structures, the government should fully consider the effect of financial developments.
Highlights
Being an important driving force of the world’s economic growth, the future development of the Chinese economy is of great concern around the world
This paper aims to make a contribution to the energy supply structure research from the perspective of financial development
As this paper aims to explore the influence of the degree of financial development on energy supply structures, the impact of LCIR on LTPG is not analyzed here
Summary
Being an important driving force of the world’s economic growth, the future development of the Chinese economy is of great concern around the world. Starting in 2012, the Chinese economy entered the “new norm”, which means the growth rate of GDP fall from high speed to middle–high speed, and the optimization and upgrading of economic structure should be the priority for the five-year blueprint. Against this background, supply-side reform was put forward by the authorities before starting on the 13th Five-year Plan. Thermal power generation, of which coal is the main energy source in China, accounted for 75.56% of the electricity production in 2014 (National Bureau of Statistics of China (NBSC), 2015) [2]. It is important to investigate the energy supply, especially the coal supply
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