The effects of three types of environmental regulation on energy consumption—evidence from China

Abstract

Based on panel data from 1997 to 2015 in China, in this paper, the direct and indirect effects of three types of environmental regulation on energy consumption are explored with the 2SLS and system GMM method. The main conclusions of this study are as follows: (1) the effects of three types of environmental regulation on energy consumption are quite varied. The cost effect of the economical environmental regulation is significant in the direct path. However, the phenomenon of "Green Paradox" emerges in legal and supervised types of environmental regulation. The "rebound effect" of energy, which led to a new energy demand, is greater than the energy conservation generated by technological innovation in the indirect path, which is embodied as a suppression effect. (2) The legal and supervised types of environmental regulation in the eastern, central, and western regions have a Green Paradox and rebound effect on energy consumption. By contrast, the economical environmental regulation shows an opposite performance. (3) The counterfactual simulation results indicate that the net effects of three types of environmental regulation on energy consumption are different. Based on the findings, some corresponding policy implications are provided.