Mechanism of environmental regulation on energy productivity, energy structure, and carbon emissions: The role of directed technological progress

Xiaojun Sun, Yee Van Fan, Yalin Lei, Chunyan Si, Zimin Cao and Petar Sabev Varbanov

Energy, 2025, vol. 328, issue C

Abstract: The mechanism of environmental regulation on energy conservation and carbon reduction in the petrochemical industry through directed technological progress remains uncertain due to the directional characteristics of technology. This paper develops a mechanism framework and employs a panel two-way fixed-effects model to clarify the impact of environmental regulation on directed technological progress and energy conservation, while uncovering its underlying mechanisms. Subsequently, a dynamic Kaya model is constructed, using the Monte Carlo method to determine the required intensity of environmental regulation for China's petrochemical industry to actualize the SSP1-CHN, SSP1, and SSP2 scenarios. The model also simulates the future bias of technological progress, energy utilization, and potential carbon emissions under each scenario. The findings indicate that increasing the intensity of environmental regulation drives technological progress toward energy conservation, thereby enhancing energy-saving biased technological progress, improving energy productivity, and optimizing the energy structure. Furthermore, to actualize the carbon peak by 2030 and carbon neutrality by 2060 under the SSP1-CHN scenario, the annual growth rate of environmental regulation intensity in China's petrochemical industry should be no less than 8 % before 2030 and should be strengthened to 20 % after 2030.This study not only extends the application of directed technological progress theory in the energy field but also provides innovative and practical environmental policy recommendations for the low-carbon development of the global petrochemical industry.

Keywords: Energy productivity; Environmental regulation; Directed technological progress; Energy structure (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:energy:v:328:y:2025:i:c:s0360544225022935

DOI: 10.1016/j.energy.2025.136651

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