Factors influencing renewable electricity consumption in China Boqiang Lin a,n , Oluwasola E. Omoju b , Jennifer U. Okonkwo c a Collaborative Innovation Center for Energy Economics and Energy Policy, China Institute for Studies in Energy Policy, Xiamen University, Xiamen, Fujian, 361005, PR China b China Center for Energy Economics Research, School of Economics, Xiamen University, Xiamen, Fujian, 361005, PR China c Wang Yanan Institute for Studies in Economics, Xiamen University, Fujian, 361005, PR China article info Article history: Received 3 April 2015 Received in revised form 20 July 2015 Accepted 5 November 2015 Keywords: Electricity consumption Renewable electricity Environmental protection China abstract Renewable energy is an important factor in achieving a low-carbon economic development path in China. This paper investigates the factors influencing renewable electricity consumption in China. Spe- cifically, the factors that influence the share of renewable electricity in total electricity consumption in China is investigated using data from 1980 to 2011 and employing the Johansen cointegration technique and vector error correction model. The result of the analysis shows that there is a long run relationship between renewable electricity consumption and GDP per capita, trade openness, foreign direct invest- ment, financial development and share of fossil fuel in energy consumption. Economic development and financial development promotes renewable electricity consumption while foreign direct investment, trade openness and the lobby of conventional energy sources undermine the share of renewables in total electricity consumption in China. While the effects of shocks to the other variables appear to die out over time, the “lobby effect” is persistent and explosive. The results also show that there is a uni-directional short run causality from financial development to renewable electricity consumption and from renew- able electricity consumption to trade openness. The Chinese government should pursue policies that not only increase the amount of renewable electricity, but also increase the share of renewables in total electricity consumption. & 2015 Elsevier Ltd. All rights reserved. Contents 1. Introduction ........................................................................................................ 688 2. Literature review .................................................................................................... 689 3. Methods ........................................................................................................... 690 3.1. Variables and model specification ................................................................................ 691 4. Results ............................................................................................................ 691 4.1. Unit root test ................................................................................................. 691 4.2. Optimal lag selection ........................................................................................... 691 4.3. Cointegration rank test ......................................................................................... 691 4.4. Normalised cointegration coefficient .............................................................................. 692 4.5. Vector error correction model: short run dynamics .................................................................. 694 4.6. Diagnostic tests ............................................................................................... 694 4.6.1. Goodness of fit ......................................................................................... 694 4.6.2. Eigenvalue stability condition for stability test ............................................................... 694 4.6.3. Test for serial correlation................................................................................. 694 4.6.4. Test for normality of residuals ............................................................................ 694 4.7. Impulse response and variance decomposition ...................................................................... 694 5. Conclusions and policy implications ..................................................................................... 695 Contents lists available at ScienceDirect journal homepage: www.elsevier.com/locate/rser Renewable and Sustainable Energy Reviews http://dx.doi.org/10.1016/j.rser.2015.11.003 1364-0321/& 2015 Elsevier Ltd. All rights reserved. n Corresponding author at: Collaborative Innovation Center for Energy Economics and Energy Policy, China Institute for Studies in Energy Policy, Xiamen University, Xiamen, Fujian, 361005, PR China. Tel.: þ86 5922186076; fax: þ865922186075. E-mail addresses: bqlin@xmu.edu.cn, bqlin2004@vip.sina.com (B. Lin). Renewable and Sustainable Energy Reviews 55 (2016) 687–696