Effects of technological innovation on energy efficiency in China: Evidence from dynamic panel of 284 cities

Technological innovation and energy efficiency are important indicators used to measure the success of the sustainable development strategy in China. This paper aims to explore the total factor energy efficiency (TFEE) at the city level in China and to evaluate the impact of technological innovation on TFEE. Therefore, a two-stage analysis was conducted for the period from 2001 to 2013. The first stage includes an estimation of TFEE scores using the Data Envelopment Analysis (DEA) methodology and Malmquist-Luenberger index, while the second stage includes an exploration of the impact of technological innovation on the TFEE scores obtained in the first stage using a system Generalised Method of Moment (GMM) regression analysis. Based on the results of the Malmquist-DEA, the TFEE of cities in China shows an upward trend overall, but obvious differences in the TFEE are observed among the four regions, with the highest TFEE observed in the eastern region, the second highest TFEE in the central region, a lower TFEE in the northeastern region and the lowest TFEE in the western region. The system GMM regression results reveal a significant positive impact of technological innovation on TFEE at the national level. According to the regional characteristics, the technological innovation in the eastern, western and northeastern regions is particularly important for improving TFEE, but technological innovation in the central region has inhibited the improvement of the TFEE. A logical response to these findings would be to develop different policies for different regions.