Climate policy uncertainty and energy transition: Evidence from prefecture-level cities in China

Abstract

Extreme weather has become a severe threat to humanity today, with a major blow to energy systems. Energy transformation has become a significant trend in global development, and China has the responsibility and obligation to combat climate change. This paper examines the impact of climate policy uncertainty on energy transformation in China at prefecture-level cities level. A new climate policy uncertainty index and a new measure of energy transition are proposed. The results indicate that climate policy uncertainty has a negative impact on the energy transition. The result still holds after a series of robustness tests. Further analysis shows that the adverse impact of climate policy uncertainty on the energy transition weakens with more proactive government behavior and greater public environmental concerns. For cities that are economically underdeveloped, non-resource oriented and officials’ promotion pressure mounting, the disincentive to energy transition is greater when climate policy uncertainty rises.