Energy Transition and Economic Development in China: A National and Sectorial Analysis from a New Structural Economics Perspectives

Abstract

New Structural Economics (NSE) predicts that structural change in energy production would follow different patterns during different development stages and across different sectors. These variations require a range of policy responses. In this paper, we investigate this assertion by modeling China’s energy transition and economic development based on provincial panel data from 2000 to 2012. By using static models (Fama–MacBeth, OLS, fixed effect) and dynamic models (difference and system GMM), we find the relationship between low-carbon energy transition and economic development presents a U-shaped curve at the national level, but it is an inverted-U curve at the residential level. Furthermore, it is ambiguous in the agricultural sector and independent of economic development in the industry and service sectors. Institutional factors, natural resource endowment, environmental policy, and technological change influence China’s energy transition. Our findings supports NSE application in the Chinese energy economy and diversify energy transition policy by adjusting to the local conditions.