Energy prices and investment in energy efficiency: evidence from Chinese industry 1997–2004

Le Tang

Asian-Pacific Economic Literature, 2020, vol. 34, issue 2, 93-105

Abstract: The paper develops and implements a methodology for assessing the role of energy prices and new investment in reducing energy intensity in Chinese industry. Analysing a unique panel data set which reports firm‐level energy consumption and price from 1997 to 2004, the paper finds: the energy prices, not only the current but also the past energy prices, are key factors that driving down firms' energy intensity for all three types of firms: state‐owned enterprises (SOEs), domestic non‐SOEs (NSOEs) and foreign‐funded firms (FFEs); furthermore, SOEs exhibit a robust price‐investment channel: responding to rising energy prices, SOEs tend to invest in new energy‐efficient capital, through which SOEs reduce energy intensity; the same price‐investment channels are less robust for non‐SOEs or foreign‐funded firms.

Date: 2020
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