Does Clean Energy Use Have Threshold Effects on Economic Development? A Case of Theoretical and Empirical Analyses from China

Abstract

Increasingly serious energy security and environmental problems have become the main constraints to China’s economic development. Therefore, it is critical to explore the threshold effect of clean energy use on China’s economic growth. Based on the panel data of 30 Chinese provinces from 2000 to 2019 and using energy intensity (EI) as the threshold variable, this study adopts a panel threshold model to explore the threshold effect of clean energy development on the economy. Empirical results indicate that clean energy has a significant threshold effect on economic development, with the threshold value of EI being 0.7655. When EI is less than 0.7655, clean energy development has a more positive effect on economic growth. When the EI exceeds 0.7655, the impact is significantly positive but with a smaller coefficient. EI weakens the role of clean energy development in promoting economic growth. After 2015, the EI of most provinces in the sample was below the threshold value, which indicates that in recent years, with the economic cost of developing clean energy decreasing, the role of clean energy development in promoting the economy has become more significant. Therefore, we propose policy implications to better promote the effect of clean energy development in promoting economic growth.