Spatial spillover effect of non-fossil fuel power generation on carbon dioxide emissions across China's provinces

Abstract

This paper focused on carbon emission reduction effect of non-fossil fuel power generation on electricity sector in China using the panel data of 30 provinces over the period 1991–2015. The empirical results of both dynamic, non-dynamic spatial panel analysis and the GS2SLS method aimed at eliminating endogeneity indicate that the increased share of non-fossil fuel power generation indeed reduce the CO2 emissions from electricity sector. However, although the spatial direct effects are positive driver for reduction of electricity-related CO2 emissions in each spatial weight matrix, on the contrary, the spatial indirect effects show that the rise of local share of non-fossil fuel power generation increases the CO2 emissions from electricity sector of other regions. This so-called “beggar-thy-neighbor” effect in the process of implementing clean-oriented energy strategy reflects an urgent need of mutually beneficial coordination mechanism between regions so as to bring maximum environmental benefits of installed clean power for the whole country.