Asymmetric effects of industrial energy prices on carbon productivity

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RESEARCH ARTICLE

Asymmetric effects of industrial energy prices on carbon productivity Yongxiao Tian 1,2

&

Xianming Yang 2

Received: 3 February 2020 / Accepted: 20 July 2020 # Springer-Verlag GmbH Germany, part of Springer Nature 2020

Abstract Energy price is a key factor in reducing carbon emissions. This paper assesses the relationship between energy prices and carbon emissions from the industrial sector in China. Using panel data covering 31 industrial sectors for the period 2003 to 2015, we calculate the industrial energy price index and then estimate the effects of sector-level energy prices on carbon emissions based on a panel smooth transition regression model. The results show that the nexus between industrial energy prices and carbon emissions is nonlinear overall, and energy prices have a significantly negative effect on carbon emissions, while this negative effect gradually weakens with an increase in energy prices. Moreover, the negative effect of energy prices on carbon emissions is more significant in energy-intensive sectors when energy prices exceed the threshold value. The findings emphasize the importance of energy prices for energy conservation and emission reduction and imply that energy prices can be used as a regulation tool for government industrial energy saving and emission reduction. Keywords Industrial energy price . Carbon emission . China’s industrial sectors . Nonlinear effects . Panel smooth transition regression . Low carbon development

Introduction The International Energy Agency (IEA) argues that industry was responsible for approximately 38% of global total final energy use in 2018, and the industrial end-use sectors are the largest contributor to the overall growth in final consumption. According to the experience from industrialized countries, carbon dioxide emissions will change as the level of industrialization rises. As the country with the largest energy consumption and carbon emissions worldwide, China maintains the development characteristics of high energy consumption and high emissions in the process of industrialization (Liu et al. 2015; Yan and Fang 2015; Zhang et al. 2016). The proportion of energy consumption in China’s industrial sectors in the country’s total energy consumption increased from Responsible editor: Eyup Dogan * Yongxiao Tian [email protected] 1

Theoretical Economics Postdoctoral Station, Yunnan University, Kunming 650091, China

2

School of Development Studies, Yunnan University, Kunming 650091, China

64.68% in 1980 to 77.63% in 2012 and remained at a high proportion of 65.66% in 2017. It can be said that energy consumption is the second largest engine of China’s industrial economic growth, and most industrial sectors have the characteristics of high consumption and strong dependence on energy (Chen 2009; Ouyang and Lin 2015). In 2015, China made a commitment at the United Nations Climate Change conference in Paris to peak carbon emissions and reduce carbon emissions per unit of GDP by 60 to 65% by approximately 2030 compared to the 2