The Impact of Renewable Energy Subsidy Policies on Indirect Carbon Emissions in the Power System

Yuanying Chi, Chenfeng Zhang, Mengwan Zhang, Yanzhao Zhang and Yuxi Wu

Advances in Management and Applied Economics, 2025, vol. 15, issue 4, 3

Abstract: As a core policy instrument for low-carbon transition in China's power systems, the mechanism through which renewable energy subsidies mitigate indirect carbon emissions remains underexplored. This study empirically examines the impact of renewable energy generation subsidy policies on indirect carbon emissions in power systems using panel data from 30 Chinese provinces (2011-2020). The findings reveal that: (1) Renewable energy subsidies directly suppress indirect carbon emissions and reduce emissions indirectly by curbing energy consumption. (2) Regional heterogeneity shows stronger emission reduction effects in central and western China due to heavy industry agglomeration and reliance on electricity transmission. (3) Electricity consumption heterogeneity indicates significant emission reductions in medium-to-high consumption areas constrained by rigid energy demand. Policy recommendations include establishing a dynamic subsidy mechanism for central/western China, implementing "energy storage-quota" differentiated strategies for high/low consumption areas, and reorienting subsidies toward technological innovations such as hydrogen energy and energy storage. Â JEL classification numbers: P28.

Keywords: Renewable Energy; Subsidy Policy; Power Systems; Indirect Carbon Emissions; Carbon Neutrality Goals. (search for similar items in EconPapers)
Date: 2025
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