Do feed-in tariff reduction and green certificate trading effectively promote regional sustainable development?

Two main national policies, feed-in tariff (FIT) and tradable green certificate market (TGC) are adopted to support China's renewable energy (RE) development. Yet it remains an open question whether their influences effectively contribute to regional sustainable development. This study first measures the green total factor productivity (GTFP) of 31 mainland provinces from 2013 to 2020. Then, an empirical investigation is conducted to analyze the impact of China's FIT reduction and TGC policies on provincial GTFP. So far as provincial GTFP is concerned, empirical results confirm promotion effects from FIT reduction policy, and negative effects from green certificate trading practices. It also presents similar effects on provincial green technology innovation, promotion from FIT reduction, while hindering influence from TGC market. A point worth noting is that a positive effect on provincial GTFP results from a joint implementation of FIT reduction and TGC. Provincial GTFP is partially affected through RE power generation proportions. This paper's highlight lies in revealing energy policies' crucial role, such as FIT reduction and TGC markets, in regional sustainable development promotion. These policies become indispensable in China's long-term sustainability.

Automated summary

This study examines the impact of China's feed-in tariff reduction and tradable green certificate market policies on provincial green total factor productivity (GTFP). The results show that the feed-in tariff reduction policy has a positive effect on GTFP, while the green certificate trading practices have a negative effect. Additionally, the joint implementation of feed-in tariff reduction and tradable green certificate market policies has a positive effect on GTFP.