Impact of Energy Efficiency and Financial Support on Green Upgrading in China’s Industrial Sector

Abstract

The report from the 20th National Congress of China emphasizes the importance of focusing on the clean, low-carbon, and efficient use of energy, increasing financial support, and promoting green upgrading within the industrial sector. This paper, based on annual data, employs the entropy weight method to construct a comprehensive index reflecting the impact of green upgrading in industrial sectors. To delve deeper, it utilizes the DEA model to measure energy efficiency and its subdivision BCC model to break down energy efficiency into technical and scale efficiency. The financial support landscape is examined from the vantage points of both direct and indirect financing. Using a multivariate time series model, this paper thoroughly investigates the influence of energy efficiency and financial support on the green upgrading of the industrial sector. The findings reveal a significant positive impact of both energy efficiency and financial support on green upgrading in industrial industries. Notably, scale efficiency emerges as the primary driver of energy efficiency. Moreover, indirect financing proves to be more effective in promoting financial support than direct financing. The empirical results retain their robustness even after substituting explanatory variables. The study concludes by contextualizing the research findings within the current real-world scenario, offering practical insights, and proposing specific recommendations.