An analysis of financial support, technological progress and energy efficiency: evidence from China

In order to explore the nonlinear relationship between financial support, technological progress and energy efficiency, a panel smooth transition regression (PSTR) is developed to analyze the impact of financial support and technological progress on the energy efficiency. Based on panel data of 30 provinces in China from 2003 to 2016, the total-factor energy efficiency of 30 province-level divisions in China are evaluated using Data Envelopment analysis (DEA). The results show that financial support and technological progress are generally conducive to increasing energy efficiency. However, the increment effect of financial support and technological progress on energy efficiency transitions smoothly between high and low regimes with the changes of the transition variables, such as local government expenditure; foreign direct investment, energy structure and industrial structure. Therefore, the results emphasize the need for enhancing financial support and technological progress in increasing energy efficiency.