Environmental regulation and energy investment structure: Empirical evidence from China's power industry

• Published in: Technological forecasting & social change Vol. 167; p. 120690
• Main Authors: Xie, Li, Li, Zexin, Ye, Xiuhua, Jiang, Yanru
• Format: Journal Article
• Language: English
• Published: New York Elsevier Inc 01-06-2021; Elsevier B.V; Elsevier Science Ltd
• Subjects: Analysis; Command and control; Command-and-control environmental regulation; Electric industries; Electric power generation; Electric power production; Electric utilities; Energy; Environmental law; Environmental policy; Environmental protection; Environmental regulations; Generalized method of moments; Green building (Construction); Investment structure; Investments; Laws, regulations and rules; Market-based environmental regulation; Markets; Method of moments; Optimization; Policy implementation; Power generation; Power structure; Regions; Regulation; Regulations; Sustainable development; System generalized method of moments; China; System generalized method of moments; Command-and-control environmental regulation; Market-based environmental regulation; Investment structure; Power generation
• ISSN: 0040-1625; 1873-5509
• DOI: 10.1016/j.techfore.2021.120690

•Command-and-control and market-based environmental regulation(ER) are identified.•ER increases the proportion of new energy investment.•Command-and-control ER increase investment ratios of new energy.•FCER increases the proportion of new energy investment.•ICER increases the proportion of new energy investment in China's eastern region.
Investment structure optimization is important for achieving green development, and environmental regulation affects enterprises’ investment behavior significantly. This study divides environmental regulation into market-based and command-and-control policies. The latter is further divided into the formulation and implementation of policies. Using the Chinese power generation industry from 2007 to 2017 as a sample, we employ the system generalized method of moments (system GMM) to study the impact of environmental regulation on the energy investment structure and explore how differences in regions and environmental regulations affect the energy investment structure. The results show that although environmental regulation increased the proportion of investment in new energy power generation, different types and levels of environmental regulations affected investment in power generation differently. Stricter command-and-control environmental regulation policies at the formulation level increased the investment proportion of new energy power generation. However, the regional data show that different types and levels of environmental regulation affected the power generation investment structure in each region differently. Both command-and-control and market-based environmental regulation in China's central and western regions failed to play their role. Moreover, the implementation of command-and-control environmental regulation policies significantly influenced the direct increase in the proportion of new energy power generation in China's eastern region.