Demand and supply structure analysis of China's renewable electricity

Since 2005, China has been the top one country who leads the renewable electricity generation and consumption. For the purpose of reducing CO ₂ emission, this study analyzes the demand and supply structure of China's renewable electricity by using the simultaneous equation model (SEM). Yearly time series data from 1981 to 2008 were collected to be used for the estimation of the model. The instrument variable method was used to estimate the SEM model. The estimated results suggest that the quantity of renewable electricity is important for the demand side but not significant for the supply side. To increase the supply of China's renewable electricity, improving the technology associated with generating new energy seems to be a good way. But the policy maker should be careful for the indepth demand analysis since income and population turn out to be statistically significant for affecting the demand of renewable electricity.