Dynamic environmental regulation threshold effect of technical progress on green total factor energy efficiency: evidence from China

Sustainability is a strategic choice for the transition to a green economy in China. Improving green total factor energy efficiency (GTFEE) is the key to realizing the dual targets of energy-saving and economic growth. This paper empirically tests the nonlinear effects of environmental regulation on technical innovation affecting GTFEE by using panel data of 271 prefecture-level cities in China from 2004 to 2019. Meanwhile, a system GMM approach is used to verify the channels through which technical innovation affects GTFEE. Finally, the spatial and temporal characteristics of technical innovation affecting GTFEE are analyzed from the perspective of environmental regulation. The empirical results are as follows: (1) Technical innovation can significantly improve GTFEE. However, this improvement effect is a threshold characteristic; when environmental regulation is above the threshold value, technical innovation has a greater improvement effect on GTFEE. (2) Besides directly influencing GTFEE, technical innovation can also indirectly influence GTFEE via channels such as economic growth effect, industrial structure upgrading effect, and foreign investment effect. Meanwhile, indirect influence channels also show environmental regulation heterogeneity. (3) The number of cities crossing the threshold of environmental regulation in China increases year by year, which helps technical innovation play a role in improving GTFEE. However, there are still a small number of cities that do not cross the threshold during the sample period, which should attract the attention of local governments.

Automated summary

The study found that in China, environmental regulation has a significant nonlinear impact on technical innovation, leading to improvements in green total factor energy efficiency. By increasing environmental regulation and through various channels of indirect influence of technical innovation on GTFEE, sustainable development in various cities in China can be better promoted, which deserves the attention of local governments.