The Influence of Directing Environmental Policies on the Technology Selection and TFP of Chinese Power Generation Companies

Zhang Jun

doi:doi:10.16538/j.cnki.jfe.2016.04.013

Abstract

This paper considers the 2005 Renewable Energy Law in China as a natural experiment and investigate the influence of this policy on the clean power generation technology by difference-in-difference method. It finds that:firstly, the Renewable Energy Law and its related policies promote the use of clean technology and improve the productivity of power companies. The production capacity and total factor productivity(TFP) of clean power generating plants increase by 8% and 10% respectively, compared to traditional power generating plants. Secondly, the policy effects reinforce over time. Thirdly, power companies that receive subsidies tend to invest more on research and development(R&D) and achieve more significant TFP improvements. Thus the renewable energy policy promotes the clean technology bias of power generation industry. The conclusions of this paper can judge the role of public policy in changing the bias of environment technology, and can provide theory basis for the corresponding environment policy.