Study On The Relationship Between Environmental Regulation And Fossil Energy Consumption Path In China

Energy shortages, climate change, and environmental pollution are critical issues the entire world is faced with currently. Especially for China, who is on the way of urbanization and industrialization with the expense of environmental pollution and natural resources’ exhaustion. Essentially, the crisis caused by over-consumption of fossil fuels has been the main bottleneck that constraints China’s further sustainable development. As is known, fossil energy consumption is the main source of environmental pollution emission. How to control the fossil energy consumption therefore becomes the key to achieve the win-win situation of environment protection and resource sustainable utilization. Government has adopt a variety of environmental policies to tackle these increasingly pressure of energy saving and carbon emission reduction in China.This research tries to reveal the relationship and mechanism from environmental regulation to fossil energy consumption path. At first, under the framework of neoclassical growth theory, this paper analyzes the non-liner relationship between environmental regulation and fossil energy consumption both directly and indirectly. On the one hand, with the viewpoint of environmental cost, a theortical model is established to explore the direct relationship between environmental regulation and fossil energy consumption path: Green paradox or Compliance cost? On the other hand, the theortical model for indirect relationship refer to technical progress and structure change. We induce some intervening variable to the model for the indirect relationship analysis including energy saving technological progress, pollution abatement technological progress, backstop technological progress, industrial structure, energy consumption structure and factor endowment structure. On this basis, we empirically analyze the non-liner effects of environmental regulation and fossil energy consumption through China’s provincial panel data during 2003-2012, with panel data model, spatial panel data regression and threshold regression methods. Finally, in order to save fossil energy and force energy peak arrival in advance, the government needs formulate environmental policy according to local conditions and make full use of indirect benefit of technological progress and economic structure transformation in China.The main conclusions are as follows:(1) there is an inverted "U" shaped relationship between formal environmental regulation and per capita fossil energy consumption, which means only the environmental regulation is over a certain threshold the good energy-conserving effect would exist. In the other words, with the increase of formal environmental regulation intensity, the empirical study of direct relationship change from Geen paradox effect to Compliance cost effect. In contrast, the result for informal environmental regulation and fossil energy consumption path is non-significant which means that informal environmental regulation could not yet cut down fossil energy consumption by strengthen the citizens’ environmental awareness in China.(2) With the consideration of spatial autocorrelation and heterogeneity of fossil energy consumption, it has been found that adjacent province’s fossil energy consumption has a significantly positive role in increasing the local one’s fossil energy consumption. And the relationship of environmental regulation and fossil energy consumption present significant spatial heterogeneity.(3) Formal environmental regulation can reduce fossil energy consumption by promoting fossil energy efficiency, whereas, it also stimulate more fossil energy consumption by driving pollution abatement technological progress. Simultaneously, informal environmental regulation has the opposite effection. Besides, backstop technological progress can not modify the relationship of environmental regulation and fossil energy consumption as the intervening variable in China.(4) Formal environmental regulation can reduce fossil energy consumption by forcing industrial structure and energy consumption structure optimizing. In contrast, informal environmental regulation policy has the undesired impacts on fossil energy optimal allocation. In addition, with the influence of industrialization, the dromitropic action of factor endowment structure change is nonsignificant to formal and informal environmental regulation.