Fiscal decentralisation and renewable energy development: Inhibition or promotion?

Shanyong Wang and Ling Ma

Energy, 2024, vol. 311, issue C

Abstract: In line with global green development and decarbonisation initiatives, China has prioritized renewable energy advancement in recent decades. Given the critical role of financial support, scholarly attention has increasingly focused on the impact of fiscal decentralisation (FD) within this sector. This study investigates FD's effect on renewable energy development, analyzing data from 30 Chinese provinces between 2008 and 2022. Findings reveal that FD tends to impede renewable energy progress. Specifically, a one-standard-deviation increase in FD leads to a decrease of 23.1775 % of a standard deviation in renewable energy development. However, this hindrance can be mitigated by foreign direct investment and central transfer payments, while research and development intensity exacerbates the negative impact. Notably, regions with limited natural resources, weaker environmental regulations, fiscal transparency, high marketisation, energy demand, and vertical fiscal imbalances experience a more pronounced decentralisation-renewable-energy relationship. Anti-corruption campaigns in China can alleviate but not reverse this effect. Furthermore, the diffusion of technology and cooperative efforts in nearby regions positively influence renewable energy development. Nonetheless, overall effects still turn out negative due to competition among local governments under the FD framework. Based on these findings, policy recommendations for accelerating renewable energy development are summarized.

Keywords: Fiscal decentralisation; Renewable energy development; Anti-corruption; Threshold model analysis; Spatial spillover effect (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:energy:v:311:y:2024:i:c:s0360544224030792

DOI: 10.1016/j.energy.2024.133303

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