China's Renewable Energy Shift Faces Sustainability Challenges

The research, published in the journal Energy Economics, assessed the effectiveness of China's Plan on Clean Energy Accommodation (PCEA) from 2018 to 2020, covering 281 prefectures. The findings suggest that the rapid push towards cleaner energy has, paradoxically, reduced green total factor productivity (GTFP) - a critical measure of economic growth that accounts for resource efficiency and environmental impact.

Professor Ali Emrouznejad, Professor and Chair in Business Analytics at the University of Surrey and co-author of the study, explained the findings: "Our research challenges the conventional wisdom that renewable energy transition is an unequivocal good. While the shift to cleaner energy sources is essential, it is clear that the current approach is creating a short-term financial strain on local governments in China."

The study argues that the substantial financial resources required for renewable infrastructure are diverting funds from critical research and innovation, potentially stalling technological progress necessary for long-term sustainability. This financial crowding out is particularly significant as innovation remains a cornerstone for achieving future climate goals.

Moreover, the research highlights regional disparities, noting that southern and resource-dependent cities in China are especially vulnerable to the financial pressures of the current energy transition policies. The authors suggest that both local and central governments should reconsider their funding strategies, encouraging greater private sector involvement to share the financial burden and stimulate technological advancement.

Professor Emrouznejad added: "Our findings challenge the notion that renewable energy transition is inherently beneficial. The transition is vital, but we must ensure that it doesn't compromise our commitment to innovation and long-term sustainability."

Research Report:Renewable energy transition and sustainable development: Evidence from China