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Urbanization and energy intensity: evidence from the institutional threshold effect
Zhongfei Chen1,2, Mengling Zhou3
1School of Economics, Jinan University, No.601 Huangpu West Road, Guangzhou, Guangdong, China.
Environmental Science and Pollution Research International
|October 28, 2020
Summary
Urbanization increases energy intensity, but strong institutional quality can mitigate this effect. This institutional quality threshold significantly impacts energy consumption across different country groups and energy types.
Area of Science:
- Environmental Science
- Economics
- Energy Policy
Background:
- Rapid global urbanization presents significant challenges to energy security.
- Understanding the drivers of energy intensity is crucial for sustainable development.
- The role of institutional frameworks in mediating environmental-economic relationships is increasingly recognized.
Purpose of the Study:
- To analyze the impact of urbanization on energy intensity using panel data.
- To evaluate how institutional quality moderates the urbanization-energy intensity nexus.
- To investigate the varying effects of institutional quality across different country income levels and energy sources.
Main Methods:
- Utilized panel data from 72 countries spanning 2000-2014.
- Employed a panel threshold model to assess the moderating role of institutional quality.
- Analyzed the mediating effect and threshold variations based on country income and energy types.
Main Results:
- Increased urbanization was found to elevate energy intensity.
- Institutional quality exceeding a specific threshold significantly weakens the positive effect of urbanization on energy intensity (by 0.033).
- The institutional quality threshold effect differs between OECD and non-OECD countries, promoting energy reduction and less consumption, respectively. It is significant for fossil fuels but not renewable energy.
Conclusions:
- Effective institutional quality is a key factor in mitigating the energy intensity challenges posed by urbanization.
- Policy interventions should consider institutional strengthening to manage energy consumption during urban development.
- The findings highlight the need for tailored energy policies that account for national income levels and dominant energy sources.
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