Can fiscal decentralization stimulate fuel switching from coal to natural gas in China?

Liangliang Liu, Xin Wang and Wenqing Zhang

Journal of Economic Policy Reform, 2025, vol. 28, issue 4, 505-528

Abstract: A literature gap exists in understanding the influence of fiscal decentralization (FD) on the switch from coal to natural gas. This study examines the influences of FD on coal and natural gas consumption, using provincial panel data from China spanning 2005–2019. Results reveal that FD hinders the transition from coal to natural gas, but this effect has obvious regional heterogeneity. Moreover, FD promotes fuel switching by improving intergovernmental fiscal transfers but inhibits it by curbing fiscal science and technology expenditure. These findings offer a new perspective for governments on promoting fuel switching by appropriately controlling the FD level.

Date: 2025
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DOI: 10.1080/17487870.2025.2505454

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