How does China's green institutional environment affect renewable energy investments? The nonlinear perspective

Xiaolei Yang; Lingyun He; Zhangqi Zhong; Deqing Wang

doi:10.1016/j.scitotenv.2020.138689

How does China's green institutional environment affect renewable energy investments? The nonlinear perspective

Sci Total Environ. 2020 Jul 20:727:138689. doi: 10.1016/j.scitotenv.2020.138689. Epub 2020 Apr 13.

Authors

Xiaolei Yang¹, Lingyun He², Zhangqi Zhong³, Deqing Wang¹

Affiliations

¹ School of Management, China University of Mining and Technology, Xuzhou 221116, China.
² School of Management, China University of Mining and Technology, Xuzhou 221116, China; Jiangsu International Energy Policy Research Center of Colleges and Universities, Xuzhou 221116, China. Electronic address: Lingyun_he@cumt.edu.cn.
³ School of Economics, Zhejiang University of Finance & Economics, Hangzhou 310018, China.

PMID: 32330724
DOI: 10.1016/j.scitotenv.2020.138689

Abstract

This paper proposes a concept of green institutional environment and constructs a green institutional environmental index through ordered logistic model. Based on this, taking 92 renewable energy listed enterprises in China from 2007 to 2016 as sample, it investigates the effect of green institutional environment on renewable energy investment with semiparametric method and further discusses how the effect works. The results show that, first, there is a nonlinear ("U-shaped") relationship between green institutional environment index and renewable energy investment. It indicates that when green institutional environment is in the initial stage of development, it cannot promote renewable energy investment, but produces an inhibitory effect; however, when the green institutional environment develops to a certain level, it will significantly promote renewable energy investment. Second, green institutional environmental index consists of green credit, government subsidies and environmental taxes. When the green credit and government subsidies develop to certain levels, they will promote renewable energy investment, however, when government subsidies exceed a certain level, it may produce a negative impact on renewable energy investment, and effect of the green institutional environment on renewable energy investment is mainly reflected through green credit; besides, increasing environmental taxes can promote renewable energy investment in sample intervals. Third, the impact of green institutional environment on renewable energy investment of large enterprises is more significant than that of medium-, small-, and micro-sized enterprises; however, the impact of government subsidies on renewable energy investment is mainly embodied in medium-, small-, and micro-sized enterprises. Fourth, during a period of high volatility (2012-2015), relationship between the green institutional environment and renewable energy investment (inverted "U-shaped") are different from that of 2007-2016. It indicates that the implementation of policies has increased the volatility of the level of the green institutional environment, which may lead to a negative impact on renewable energy investment.

Keywords: Green institutional environment; Renewable energy investment; Semiparametric regression model.