National research funding and energy efficiency: Evidence from the National Science Foundation of China

The enhancement of energy efficiency is crucial to saving energy and reducing pollution emissions. Increasing investment in basic research may promote innovative energy technologies that improve energy efficiency. In this paper, the authors employ a stochastic frontier analysis to evaluate the impact of government funded research programs on improving national energy efficiency using estimates of energy efficiency based on the Shepherd energy distance function. The analysis used panel data from 30 provinces in China over the 2006-2015 period. Using the number of research programs funded by the National Natural Science Foundation of China (NSFC) as a proxy, the results show that research funding has a significantly negative effect on energy inefficiency. The average energy efficiency continually increased from 2006 to 2015 in China, while the energy efficiency in the eastern region was higher than that in the central and western regions in most years. Moreover, a robustness test further validates and supports these findings. Some policy implications are proposed based on the empirical results.