Developing renewable energy in the face of extreme climate: Implications of tertiarization

Chien-Chiang Lee and Zhihang Wu

Energy, 2025, vol. 321, issue C

Abstract: The relationship between climate extremes and renewable energy is a prominent topic in economic research, yet academic understanding of this relationship remains limited. Therefore, this paper explores the relationship between extreme climate (EC) and renewable energy development (RED) across 30 provinces in China from 2009 to 2021, and considers the dynamic role of tertiarization in this relationship, further expanding research in this field. Grounded in the panel smooth transition regression (PSTR) framework, this research detects a significant non-linear connection between EC and RED. When the tertiarization (TER) process exceeds a certain threshold, the negative impacts significantly outweigh the positive ones. The article primarily explores two aspects of heterogeneity. (1) In terms of energy types, the relationship between EC and the growth of the three primary renewable energy sources—solar, wind, and hydro—exhibits a comparable "inverted U-shaped" pattern due to the TER. Among these, the economic impact of EC on solar energy development shows the greatest variability. (2) Regarding regional economic development levels, EC negatively impacts RED more significantly and at an earlier stage in economically advanced regions compared to underdeveloped regions. The robustness study indicates that the proportion of the tertiary sector's GDP to total GDP serves as a substitute variable for the TER, with a nonlinear relationship threshold of 0.636. The empirical findings of this study provide policymakers aiming to optimize regional industrial structures, promote energy transition, and achieve sustainable development with constructive insights. Establishing a sound industrial structure, along with appropriate environmental regulations and government oversight, can effectively mitigate the negative impacts of extreme climate events.

Keywords: Renewable energy; Tertiarization; Climate extremes; Panel smooth transition regression model; 30 provincial regions in China (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:energy:v:321:y:2025:i:c:s0360544225011107

DOI: 10.1016/j.energy.2025.135468

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