Economic policy uncertainty and renewable energy investment: An empirical study from renewable energy firms in China

Lan Gao, Jing Wang and Xianfeng Hu

Economic Analysis and Policy, 2025, vol. 87, issue C, 605-620

Abstract: In the context of carbon neutrality, the growth of renewable energy is crucial for promoting energy transition and achieving energy security. However, whether and when the uncertainty generated by economic policies can affect renewable energy investment remains to be answered. To bridge the research gap, this research examines the influence of economic policy uncertainty (EPU) on renewable energy investment in China, selecting a representative sample of 137 listed renewable energy firms from the year 2000 to 2020. The findings reveal that EPU negatively impacts renewable energy investment, which is verified by a set of robustness tests. Furthermore, the negative effect of EPU on renewable energy investment can be alleviated by political connection and internal control. That is, the stronger the political connection and the better the internal control, the weaker the inhibiting effect of EPU on renewable energy investment. Additionally, the effect of EPU on renewable energy investment varies across the firm’s supply chain position. EPU significantly inhibits renewable energy investment for firms in upstream supply chain position while not for firms in middle and downstream supply chain positions. This research adds to the existing literature on EPU and renewable energy investment and provides policy implications for governments and firms.

Keywords: Economic policy uncertainty; Renewable energy investment; Political connection; Internal control; Supply chain position (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:87:y:2025:i:c:p:605-620

DOI: 10.1016/j.eap.2025.06.030

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