Will Fiscal Decentralization Stimulate Renewable Energy Development? Evidence from China

Carbon neutrality is a widespread target for many countries to mitigate the climate change. Clean power is expected to be the fastest-growing energy in the next decades. In this context, renewable energy development is a significant road for energy transition. Recently, more and more central governments worldwide grant relevant responsibilities of environment protection to subnational governments. This paper focuses on the impact of fiscal decentralization on renewable energy development in China, which is currently one of the largest market for renewable energy development. The results show that fiscal development has positive effects on renewable energy development. Although Chinese provinces have variety of local environmental, institutional and social conditions, the “race to the top” approach still occurs. This research reveals the role of fiscal decentralization in renewable energy development and provides important policy implications for renewable energy development considering fiscal decentralization. It fills the gap between former research and current situation of renewable energy development on different regions’ devolution features. Specifically, this study takes different regions’ economic development situations and environment protection pressures into consideration. It provides implications on how to keep the balance of environment protection and economic development for different regions