Asymmetric effects of industrial energy prices on carbon productivity

Energy price is a key factor in reducing carbon emissions. This paper assesses the relationship between energy prices and carbon emissions from the industrial sector in China. Using panel data covering 31 industrial sectors for the period 2003 to 2015, we calculate the industrial energy price index and then estimate the effects of sector-level energy prices on carbon emissions based on a panel smooth transition regression model. The results show that the nexus between industrial energy prices and carbon emissions is nonlinear overall, and energy prices have a significantly negative effect on carbon emissions, while this negative effect gradually weakens with an increase in energy prices. Moreover, the negative effect of energy prices on carbon emissions is more significant in energy-intensive sectors when energy prices exceed the threshold value. The findings emphasize the importance of energy prices for energy conservation and emission reduction and imply that energy prices can be used as a regulation tool for government industrial energy saving and emission reduction.