Technological Change Effect Of China’s Energy Saving And Emissions Reduction Policy:a Perspective From Provincial Level

Making economic growth compatible with energy conservation and environmental protection has become an outstanding theme China facing in the current and in the future. In general, scholars agreed that one of the most effective ways to solve this problem is to develop or adopt energy-saving and\or environmental-friendly technology (EET). However, the externality of technology change reduces the incentives for firm to invest in this type of technologies. It is indispensable for government to make some measures for the development of the EET. Against this background, it is significant to analyze the effect of energy-saving and emissions-reduction policy (ESER) to technological change of EET (EETC), since ESER is one of ways for China’s government intervening economic development, which refers to a package of policy instruments for tackling energy shortage and environmental deterioration in the11th Five-Year Plan.Up to now, there are few studies on technology change effect of ESER. This paper tries to fill this gap by studying its related theories and empirical methods. First, from the two perspectives--technology and institution, this paper defines EETC as:compared to relevant alternatives, the development or adoption of a product, production process, management method and institution that is novel to the organization (developing or adopting it), which results, throughout its life cycle, in the improvement of energy efficiency and/or environmental performance. Subsequently, in the frontier analysis framework, this analysis expands the two-dimension directional distance function to define the energy-saving and emissions-reduction directional distance function (EDDF), and then use it to construct the TFP growth index of EET. The main conclusions are as follows,(1) The construction of TFP growth index of EETThis paper defines EDDF by setting a three-dimensional vector which determines the direction of technological change towards the frontier of EET. Following their respective directions, energy inputs, emissions and desirable outputs can be translated to get the frontier, where producers attain the maximum of desirable outputs and emit the least of undesirable outputs using the minimum of energy inputs along with a given amount of non-energy inputs. According to the construction method of Luenberger productivity index, this analysis uses EDDF to construct the TFP growth index of EET, which measures EETC across periods. Its value of larger or less than and equal to zero shows technical progress, technical regress and technical relative stagnation. Moreover, according to the way to obtain technology change, the indicator can be decomposed two components:technological innovation and technology adoption.(2) Empirical analysis on the impact of ESER on EETC in ChinaThis paper employs DEA method to calculate EETC. The results show that, the value of technology change before (2001-2005) and after (2006-2010) the enforcement of ESER is0.82%and2.51%, respectively. The enforcement of ESER increases the rate of technical progress at the national level by more than two times. However, the effects across provinces are different. ESER accelerates technological progress rates of24provinces, but slightly decrease the progress rates for6provinces. The convergence test on technological progress rates for30provinces in the11th Five-Year Plan shows the difference will be diminishing over time. From the specific way, technological progress effect of ESER at the national level is mainly attributed to accelerated adoption of the frontier technology, and the effect of technical innovation is relatively weak. Specifically, the provinces located in the east area attain technical progress by increasing technical innovation activities of EET, and the provinces in the central and west area obtain technical progress by accelerating the adoption for advanced technologies.(3) The determinants of EETCThis paper employs spatial panel data regression approach to estimate the impact of economic development level, economic structure, knowledge capital stock and energy structure on EETC. The results shows, technology change rates between adjacent provinces are interdependent; the enhancement in economic development level, or the increase in the ratio of the second industry to GDP or R&D investment, promotes significantly technology progress of EET, and comparing the elasticity values for the three coefficients, the value for R&D investment is the smallest. Therefore, the future ESER should focus on the incentives of regions investing in technical innovation of EET. Finally, the proportion of coal to total energy consumption weakens technology progress of EET, but the impact is not significant.