Quantifying international oil price shocks on renewable energy development in China

Yurong Zhao, Yingying Zhang and Weixian Wei

Applied Economics, 2021, vol. 53, issue 3, 329-344

Abstract: It is a common belief that renewable energy is an effective alternative to traditional fossil energy, namely, oil; thus, an international oil price shock is a significant factor affecting renewable energy development. This paper builds a recursive dynamic computable general equilibrium model to explore the effects of rise and fall in international oil price on the investment and outputs of renewable energy industry, as well as the macroeconomy and environment in China. In addition, the role of renewable energy policy is verified through simulating the combination scenario of oil price fluctuation and renewable energy policy. The results reveal that an increasing international oil price can advance the outputs and investment of renewable energy, decrease China’s real GDP and exports, and improve the atmosphere environment, and the influence of a decreasing international oil price is the opposite. Furthermore, renewable energy policy can attenuate the negative effect of a decreasing oil price on renewable energy development and the environment, and strengthen its contribution to GDP.

Date: 2021
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Citations: View citations in EconPapers (17)

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DOI: 10.1080/00036846.2020.1808173

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