Energy structure dividend, factor allocation efficiency and regional productivity growth-- An empirical examination of energy restructuring in China

This paper introduces the energy structure variables into the generalized cost function from the dual perspective of energy structural dividend and factor allocation distortion. It quantitatively estimates the factor allocative efficiency, cost elasticity and marginal cost of the energy decarbonization practice in China from 2004 to 2019. Estimation results show that: (i) there is a structural dividend effect of energy restructuring in China. On average, a 1% increase in the level of decarbonization of the energy structure reduces the total cost by 0.57% and the marginal cost by 5.846 billion yuan. Specifically, a 1% reduction in the share of coal consumption reduces the marginal cost by 4.590 billion yuan. (ii)Energy restructuring has accelerated factor allocation distortions in recent years. In terms of the impact of energy decarbonization on productivity growth, the inhibition of factor allocation distortion on productivity growth mainly comes from scale effect. (iii)Energy restructuring has a heterogeneous impact on productivity growth across provinces. Productivity growth in energy-consuming regions is lower than that in energy-supplying regions, while the regions where factor allocation distortions have a greater impact on productivity growth are mostly found in the central and western parts of the country where factor markets are less developed.

Automated summary

This paper examines the impact of energy decarbonization in China on costs and productivity growth. The study finds that energy restructuring can reduce both total costs and marginal costs, but it also exacerbates factor allocation distortions. Additionally, the impact of energy restructuring on productivity growth varies across regions.