Does technological progress mode affect just energy transition? A seemingly unrelated regression analysis based on Chinese provincial panel data

Abstract

Just energy transition (JET) refers to the process of shifting from fossil-fuel-based energy systems to more sustainable and renewable energy sources in a manner that is inclusive and socially fair. Technological progress is a key driver of the energy transition. Selecting an appropriate technological progress mode (TPM) to drive JET that harmonizes environmental conservation with employment stability is crucial for economies to achieve sustainable development. Based on seemingly unrelated regression (SUR) analysis, this research uses provincial panel data of China from 2001 to 2020 to examine the effects and underlying mechanisms of various TPMs on JET. We first construct a translog cost function incorporating four TPMs, including technology import, technology transformation, cooperative research and development (R&D), and independent R&D. The study then systematically estimates and contrasts the factor bias and utilization tendencies associated with these TPMs. The findings indicate that (1) technology import does not directly facilitate JET as it leads to neutral technological progress; (2) technology transformation and cooperative R&D, associated with energy-biased technological progress, exhibit a tendency toward energy use and labor saving, which hinders JET; (3) independent R&D, linked with labor-biased technological progress, demonstrates a labor-using and energy-saving orientation, which supports JET; (4) the adverse effects of technology transformation and cooperative R&D on JET can be mitigated through enhanced environmental regulation, increased environmental taxation, and the provision of low-carbon subsidies. We offer policy recommendations for the Chinese government in promoting TPMs that foster JET while also providing insights and experiences that are beneficial to economies at various development stages in their pursuit of JET.