Exploring the Role of Environmental Regulation and Fiscal Decentralization in Regional Energy Efficiency in the Context of Global Climate

Abstract

As an important factor of production, the use of energy will greatly improve production efficiency and is the material basis for China’s sustainable development. Environmental regulation plays an important role in energy efficiency (EE), while fiscal decentralization is an important institutional context for China’s economic development. In order to explore the role of environmental regulation and fiscal decentralization on EE, this paper measures the EE of 30 provincial regions in China from 2006 to 2020 by the super-efficient SBM method, and verifies the relationship between fiscal decentralization and environmental regulation on EE using a spatial econometric model, and conclusions as follows: (1) China’s overall energy efficiency averages 0.563, still at a low level, with the highest average efficiency value in the east and the lowest in the west. (2) An inverted U-shaped relationship exists between environmental regulation and EE, and its spatial spillover effect also shows an inverted U-shaped relationship. Fiscal decentralization promotes the regional EE, and its spatial effect also significantly positive. (3) When the level of environmental regulation increases, the EE level of the local and neighboring provinces will increase. The enhancement of fiscal decentralization system can promote local EE, but it has a negative effect on the energy efficiency level of neighboring provinces. Finally, based on the results of the empirical analysis, this paper proposes suggestions for improving regional EE, which are of great theoretical and practical value for improving climate change and achieving sustainable regional economic development in China.