How Energy Price Distortions Affect China’s Economic Growth and Carbon Emissions

Ru Sha, Tao Ge and Jinye Li
Additional contact information
Ru Sha: School of Economics and Management, Xinjiang University, No. 666 Shengli Road, Tianshan District, Urumqi 830046, China
Tao Ge: Economics and Management School, Nantong University, Nantong 226019, China
Jinye Li: School of Economics and Management, Xinjiang University, No. 666 Shengli Road, Tianshan District, Urumqi 830046, China

Sustainability, 2022, vol. 14, issue 12, 1-27

Abstract: China’s energy market reform is characterized by “asymmetry” as a result of the transition from a planned economy to a market economy, leading to typical distortions in energy prices. Using panel data from 30 Chinese provinces during 2006–2018, this paper examines the impact of the price distortions of fossil energy sources (coal, oil, and natural gas) as well as renewable energy on China’s economic growth and carbon emissions. The results show that coal price distortion is the highest among the fossil energy sources, followed by oil and natural gas. Renewable energy price is positively distorted. Not all price distortions of energy sources significantly impede economic growth—only those of coal and renewable energy. In contrast, oil and natural gas price distortions promote economic growth. All four energy price distortions contribute significantly to the increase in carbon emissions. Further analysis reveals that regional heterogeneity exists in the impact of energy price distortions on economic growth and carbon emissions. Additionally, this study finds that technological innovation, industrial structure upgrading, the investment effect, the optimization of energy consumption structure, and environmental regulations are important transmission mechanisms of energy price distortions affecting China’s economic growth and carbon emissions. The findings of this study can help us to understand the relationship between energy price distortions and China’s economic growth and carbon emissions, and provide a reference for formulating energy price reform policies that benefit the win-win development of China’s economy and environment.

Keywords: energy price distortions; fossil and renewable energy sources; economic growth; carbon emissions; regional heterogeneity (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://www.mdpi.com/2071-1050/14/12/7312/pdf (application/pdf)
https://www.mdpi.com/2071-1050/14/12/7312/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:14:y:2022:i:12:p:7312-:d:839150

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().