Exploring the impact of energy saving and emission reduction fiscal policy on renewable energy development: Evidence from China

Weiliang Tao, Kumar Mangla Sachin, Shimei Weng, Xiangzheng Deng, Xue-Li Chen and Malin Song

Economic Analysis and Policy, 2025, vol. 87, issue C, 463-483

Abstract: As global energy demand continues to rise and geopolitical uncertainties intensify, developing renewable energy has emerged as a crucial strategic approach to enhancing national and regional energy security. Adopting an energy saving and emission reduction fiscal policy is a vital strategy to accelerate green transformation and promote renewable energy utilization. However, empirical examination of the impact of this type of policy on renewable energy development is nonexistent. This study is the first to systematically investigate how this policy influences renewable energy development using a staggered difference-in-differences model. The results showed that the pilot demonstration cities had significant advantages in promoting renewable energy development. Simultaneously, this positive effect can be achieved by enhancing government environmental concern, accelerating industrial squeeze, and increasing renewable energy investment. Interestingly, fiscal pressure and pressure from China’s “dual carbon” strategy both limited and enhanced policy effectiveness, respectively. Additionally, the impact of the pilot policy varied significantly based on geographical location, city size, energy endowment, and capacity utilization. Moreover, the construction of demonstration cities yielded positive environmental dividends. This study offers a valuable reference for accelerating energy transition and achieving “dual carbon” goals.

Keywords: Energy saving and emission reduction fiscal policy; Renewable energy; Staggered difference-in-differences model; Heterogeneous treatment effect (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:463-483

DOI: 10.1016/j.eap.2025.06.018

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