Pathway to develop a low-carbon economy through energy-substitution technology in China

As China is determined to develop a low-carbon economy, this study develops a carbon index as a proxy for a low-carbon economy and employs energy-substitution patents as an important technical factor to influence the low-carbon economy. The impact of heterogeneous energy-substitution technology on the low-carbon economy in China is also investigated. The conventional analysis methods, including the generalised method of moments, propensity score matching and difference-in-differences estimator, are employed. The heterogeneity and influencing mechanism of technology are also considered. Using the 2000–2016 data collected from 30 provinces in mainland China, we confirm that energy-substitution technology effectively promotes a low-carbon economy and that this kind of technology coming from enterprises also provides a better low-carbon economy than those from research institutions, university and individuals. We also find that utility-oriented technology effectively promotes a low-carbon economy than invention-oriented ones. However, invention-oriented technology does raise the degree of the low-carbon economy when it serves to complement utility-oriented technology. The influencing mechanism analysis following a two-step method clearly shows that energy-substitution technology promotes the degrees of low-carbon economy by increasing the use of clean energy. •A low-carbon index as a proxy for the low-carbon economy is first constructed.•Energy-substitution technology promotes the transition to a low-carbon economy.•Improvement of the low-carbon economy is mainly from energy-substitution technology driven by enterprises.•Utility-oriented technology promotes the low-carbon economy better than invention-oriented one.