Spatial spillover effect of environmental regulation on environmental efficiency of electric power industry in China

Abstract

The electricity power (EP) industry, a primary source of emissions, significantly affects China's energy conservation and reduction efforts. The Chinese government has introduced various regulatory policies to limit the emissions and waste generated by the EP industry. This paper intends to assess the influence of environmental regulation (ER) on the environmental efficiency (EE) within China's EP sector, particularly concerning spatial spillover effects. The slack-based and the spatial Durbin models are applied to quantify EE and analyze the nonlinear connection between ER and EE. Some findings are summarized below. First, the EE of China's EP industry has significant regional heterogeneity and exhibits a positive spatial agglomeration effect of EE. Second, the influence of ER on EE in local provinces shows a U-shaped relationship, while it exhibits an inverted U-shaped effect in neighboring provinces. Third, ER can indirectly drive EE in the local province by affecting technological innovation. Finally, policy recommendations are offered to enhance the EE in China's EP industry.