Renewable Energy in China: Market Barriers and Policy Options

Jin Yueqin, Chen Yisi

Abstract


With an obvious characteristic of innovation, the development of renewable energy (RE) industry is a process of industry innovation itself. There are serious market failures and barriers in the RE technology innovation process. The reasons for RE innovation’s market failure include “dual information externalities”, “coordination failure” and “lock-in effect”. As an emerging strategic industry, the RE industry has gained sound support from policies in recent years. Nevertheless, industrial development is being impeded by difficulties such as a lack of core technology, disorderly competition and a rupture in market demands, which also brought to the light the deviation of the current industry policies. Combined with industrial innovation theories of Neoclassical Economics, New Institutional Economics, and Evolutionary Economics, and based on the perspective of new industry policies, this paper reexamines the RE industrial policies in China and tries to explore new industry policies that accord with the innovative essence in the RE industry.


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