1. Introduction
Identifying the impact of energy price on green energy innovation is of great importance for green energy innovation promotion and energy transformation acceleration. At present, the production activity and human life become increasingly dependent upon energy consumption. According to BP statistics (
http://www.bp.com.cn/stats2019), except in 2009, global primary energy consumption has maintained a sustained growth momentum in the past 20 years. In 2018, the growth rate reached 2.9%, the highest since 2010. As the world’s largest developing country, China’s rapid economic growth in recent years has also generated huge energy consumption. In 2018, China’s primary energy consumption reached 3273.5 million tons of oil equivalent, accounting for 23.6% of the total global primary energy consumption, making it the world’s largest energy consumer. China’s fossil fuel energy consumption accounted for 87.67% of the total energy consumption in 2014, 6.76 percentage points higher than the global average (
https://data.worldbank.org). In the context of the increasing pressure on energy supply and climate change in the world [
1], especially in big developing countries such as China, accelerating green energy technology innovation as an important means to promote energy transformation has reached a broad consensus on a global scale [
2,
3,
4]. Therefore, it is necessary to analyze the key influencing factors of energy technology innovation. The induced innovation hypothesis proposed by Hicks [
5] highlights the important role of energy price in spurring innovation, and energy price is supposed to play a leading role in the improvement of green energy innovation capacity.
A growing number of studies have conducted empirical research on the impact of energy price on green energy innovation, and most of them have verified the positive inducing effect of energy price. At the macro level, Ley et al. [
6], based on the data of 18 OECD countries over 30 years, found that energy price had a significant promoting effect on green innovation from the perspective of either the number of green innovations or the ratio of green innovations to nongreen innovations. Nicolli and Vona [
7] detected that electricity prices had a positive impact on the innovation of solar energy technology and biofuels, through research on the influencing factors of renewable energy innovation in EU countries from 1980 to 2007. Using the data of 10 most innovative countries in the world from 2000 to 2018, Nunes and Catalaolopes [
8] found that oil prices had a significant positive impact on the number of patent applications of alternative energy. Also, scholars like Lanzi et al. [
9], Verdolini and Galeotti [
10], Cheon and Urbelainen [
2] have also verified the positive innovation-induced effect of energy price. At the micro-level, Noailly and Smeets [
11] used company-level data on renewable energy and fossil fuel technology patents submitted by 5261 European companies between 1978 and 2006 to explore how energy price, market size and knowledge stock affect corporate technological innovation, showing a positive and significant impact of energy price on technological innovation. However, based on the data of 26 OECD countries from 1979 to 2009, Kruse and Wetzel [
12] found that energy prices had a positive effect on innovation for some but not all green energy technologies.
However, existing studies mainly focus on developed countries, and the literature with developing countries as the research focus is still rare. According to the authors’ knowledge, at present, only Lin and Chen [
3] have examined the impact of electricity prices on China’s renewable energy technological innovation. However, electricity price is only one kind of energy price, which cannot reflect the comprehensive level of energy price. Meanwhile, in addition to renewable energy technologies, green energy technologies should also include energy conservation technologies. Besides, Lin and Chen [
3] only carried out a full-sample analysis at the national level and did not investigate the potential heterogeneous effects of energy price on green energy innovation in different regions of China. Finally, different from developed countries with a complete energy market mechanism, China has a relatively serious market distortion in energy prices due to the lagging marketization level of energy factors. Therefore, in the discussion of the relationship between energy price and green energy innovation in China, the issue of energy price distortion needs to be taken into consideration, but there is no relevant literature at present.
To understand in-depth the relationship between energy price and green energy innovation in China, this paper initially analyzes the impact of energy price on China’s green energy innovation and further explores the moderating role of energy price distortion in the connection between energy price and energy technology innovation, based on the data of 30 provinces in China from 2003 to 2017. The main contributions are as follows. On the one hand, different from most studies which focus on the impact of energy price on green energy innovation in the context of developed countries, this paper not only investigates the influence of energy price on green energy innovation but also tests whether this impact is related to the degree of energy price distortion, combined with the reality of the lagging of energy factor marketization in the process of China’s transition from planned economy to market economy, which expands the understanding of the relationship between them from a novel perspective. On the other hand, in terms of the impact of energy price on green energy innovation, this paper not only measures energy price covering four categories of commodities (i.e., coal, oil, natural gas and electricity), but also reflects green energy innovation capacity by the number of ”alternative energy production” and ”energy conservation” patents. In addition, we analyze the heterogeneous impacts of energy prices on green energy innovation capacity in different regions of China, looking at the influence of energy price on green energy innovation in a comprehensive manner.
The results show that energy price has a significant and positive impact on China’s green energy innovation in general. However, the inducing effect of energy price on green energy innovation is significant in central and western China, but insignificant in eastern China. Further research in this paper shows that energy price distortion significantly reduces the inducing effect of energy price on China’s green energy innovation. Meanwhile, this paper also finds that the degree of energy price distortion in central and western China is noticeably lower than that in eastern China, which to a large extent explains why the inducing effect of energy price is more prominent in central and western China.
The remaining part of this paper is arranged as follows: section two puts forward the research hypothesis of this paper; the third section introduces the model setting, relevant data and variables in related to the influence of energy price on green energy innovation, and then presents and discusses the results of empirical analysis; the fourth section further tests empirically whether the impact of energy price on China’s green energy innovation is related to the degree of energy price distortion; the last section summarizes the research conclusions.
2. Research Hypotheses
Focusing on the impact of energy price on green energy innovation and the moderating role of energy price distortion in the relationship between energy price and green energy innovation, this paper puts forward the following three research hypotheses.
In theory, energy price plays a leading role in green energy technological innovation. Hicks [
5] first proposed the induced innovation hypothesis, that is, energy price drives technological innovation. He pointed out that “a change in the relative prices of the factors of production is itself a spur to the invention, and to the invention of a particular kind—directed to economizing the use of a factor which has become relatively expensive”. In the research framework of Hicks, through the studies of Ahmad [
13], Kamien and Schwartz [
14] and Binswanger [
15], a relatively complete theoretical system of the relationship between factor price and innovation process has been gradually established. Generally speaking, the price rise of a certain factor will directly lead to a rise in production cost. To save production costs, enterprises usually take two measures. One way is to improve the use efficiency of this factor through technological innovation, thus reducing the use of relatively expensive factors by enterprises. The other way is to seek corresponding alternative factors. In the energy sector, the rise in energy price will not only promote enterprises to improve the use efficiency of traditional energy factors by increasing energy-saving technology innovation but also promote enterprises to increase the innovation of new energy technology, to realize the substitution between different types of energy varieties (such as nonrenewable energy and renewable energy) [
10]. This is because energy, as a necessary factor of production, cannot be replaced by other factors of production such as capital and labor [
16,
17]. In this sense, the energy price will have an inducing effect on the innovation of energy conservation and energy substitution technologies, and it will have a more prominent inducing effect on the innovation of green energy technologies.
Extensive empirical research has been conducted on the impact of energy price on green energy innovation, and most of the studies have confirmed the positive inducing effect of energy price. To test the induced innovation hypothesis introduced by Hicks [
5], early studies focused on specific industries in a single country, such as the United States, to examine the relationship between energy price and technological innovation. Lichtenberg [
18] examined the impact of energy price changes on the R&D investment of US manufacturing enterprises in the early to mid-1970s. The results suggest that higher energy price has contributed significantly to the increase in R&D investment by US manufacturers. Subsequently, Popp [
19], Linn [
20] and Kong et al. [
21] also verified the inducing effect of energy price on technological innovation. In recent years, with the increasing availability of patent data which are widely used to measure technological innovation [
22], more and more scholars begin to focus on the field of energy and investigate the impact of energy price on green energy technological innovation. As discussed above, these studies mainly focus on developed countries, and most of them demonstrate the positive impact of energy price on green energy innovation [
2,
6,
7,
8,
9,
10,
11]. More recently, some studies have made empirical findings in developing countries. Lin and Chen [
3] focused on the impact of electricity prices on China’s renewable energy technology innovation and found that in the long run, the increase of electricity prices can promote renewable energy technology innovation, but its short-term effect is not significant.
Based on the above literature review, we can find that energy price has a positive leading effect on green energy technological innovation from both theoretical analysis and most empirical studies. In this regard, this paper proposes Hypothesis 1:
Hypothesis 1 (H1). Energy price has a positive impact on China’s green energy innovation.
It should be noted that the above theoretical analysis of the impact of energy price on green energy innovation is based on a sound market mechanism. In empirical research, existing literature focuses on developed countries with a high level of energy factor marketization. However, as will be discussed in detail later, the marketization level of China’s energy factors is low in general, and there exists the issue of energy price distortion [
23,
24,
25,
26], which will weaken the inducing effect of energy price on technological innovation to a large extent. In addition, given that the degree of energy price distortion in different regions of China differs significantly [
27,
28], the inducing effects of energy price on green energy innovation may be significantly different between various regions, so this paper puts forward Hypothesis 2:
Hypothesis 2 (H2). Energy price has heterogeneous effects on green energy technology innovation in different regions of China.
Under the background of the low marketization of energy factors in the process of China’s transition from planned economy to market economy, energy price distortion plays a moderating role in the relationship between energy price and green energy technology innovation. For a long time, China’s energy price marketization process has been lagging, and the government plays a leading role in the energy price formation mechanism. Energy price has been suppressed in China over the past decades [
29]. In recent years, although the Chinese government has accelerated the reform process of the energy market, most of the four largest energy industries of oil, electricity, coal, and natural gas are monopolized by large state-owned enterprises (SOEs), who have the right to formulate a unified energy price, and the government, through administrative power, has suppressed the energy price to a lower level [
25]. At the same time, combined with inappropriate subsidy incentive policies [
30], China’s actual energy price is lower than the market equilibrium price, which leads to the distortion of energy prices [
31].
This paper holds that the low energy price in the context of distorted energy prices in China will play a negative moderating role in the inducing effect of energy price on green energy technology innovation. Specifically, the low price of coal, oil and other traditional energy commodities caused by energy price distortion cannot correctly reflect the scarcity of energy factors and environmental costs [
32], and the reduction of energy use cost will make enterprises tend to increase the consumption of low-cost energy factors in the production process, which will lead to the lack of power for enterprises to pursue energy-saving technology innovation and reduce the consumption of traditional energy factors through independent research and development or international knowledge spillover and other channels, which will undoubtedly weaken the development and utilization of new energy technologies. Therefore, the higher the distortion level of energy price is, the higher the degree of resource mismatch is, and it can be expected that the effect of energy price on green energy technology innovation in this region will be smaller. In this regard, this paper proposes the third research hypothesis:
Hypothesis 3 (H3). Energy price distortion plays a negative moderating role in the relationship between energy price and green energy technology innovation in China.
5. Conclusions
In the context that accelerating green energy technological innovation has become an important focus of promoting energy transformation in the world, it has also become a hot topic for academic circles to investigate the impact of energy price on green energy innovation. At present, the research on the inducing effect of energy price on green energy innovation mainly focuses on the developed countries with a complete energy factor market mechanism. This paper gives full consideration to great differences in economic and social development levels among different regions in China, and puts forward a research hypothesis that energy price innovation leads to overall positive but regionally heterogeneous impact on green energy innovation. Additionally, combined with the background of China’s lagging energy marketization in the process of transition from planned economy to market economy, this paper proposes the hypothesis that energy price distortion plays a negative moderating role between energy price and green energy innovation. Last but not the least, based on the data of 30 provinces in China from 2003 to 2017, this paper confirms the three hypotheses. This provides a useful reference for us to fully understand the relationship between energy price and green energy innovation in a large developing country like China, which is in the process of economic transformation. To be specific, the main conclusions can be summarized as follows.
First, energy price has a significantly positive effect on China’s green energy innovation. At the same time, whether the number of green energy patent applications or the number of green energy patent grants is used as the proxy variable of green energy technology innovation, or under different estimation methods, the research conclusion is still valid.
Second, the energy price has a heterogeneous effect on green energy technology in different regions of China. Specifically, the effect of energy price on green energy innovation is significant and positive in the central and western regions of China, but insignificant in eastern China.
Finally, energy price distortion has a negative moderating role in the relationship between China’s energy price and green energy innovation. Specifically, the inducing effect of energy price on green energy innovation decreases with the increase of energy price distortion. At the same time, the degree of energy price distortion in eastern China is much higher than that in central and western China, which also to a large extent explains why the innovation effect of energy price is not obvious in eastern China.
The conclusions of this paper have obvious policy implications. This study shows that although energy price has a significantly positive effect on China’s green energy innovation, energy price distortion will weaken this inducing effect. Therefore, the Chinese government should further accelerate the reform of energy marketization, reduce the low energy price caused by government control, and give full play to the leading role of energy price on green energy innovation through the decisive role of the market mechanism in energy resource allocation. In particular, the eastern region, which has a relatively severe energy price distortion, needs to make great efforts to reverse the situation in which the market level of energy price lags.
There are still some limitations to this study. For example, since the official R&D labor input in the field of green energy has not been released, this paper made an estimation about it, which may affect the final results. In terms of further research issues, we are more interested in whether the research results of this paper are still valid in Russia, Brazil and other developing countries and regions. Besides, in addition to energy price distortion, other factors, which deserve further research, may also explain the heterogeneity of green energy innovation-induced effects of energy prices in different regions of China.