How does China's green institutional environment affect renewable energy investments? The nonlinear perspective.

This paper proposes a concept of green institutional environment and constructs a green institutional environmental index through ordered logistic model. Based on this, taking 92 renewable energy listed enterprises in China from 2007 to 2016 as sample, it investigates the effect of green institutional environment on renewable energy investment with semiparametric method and further discusses how the effect works. The results show that, first, there is a nonlinear ("U-shaped") relationship between green institutional environment index and renewable energy investment. It indicates that when green institutional environment is in the initial stage of development, it cannot promote renewable energy investment, but produces an inhibitory effect; however, when the green institutional environment develops to a certain level, it will significantly promote renewable energy investment. Second, green institutional environmental index consists of green credit, government subsidies and environmental taxes. When the green credit and government subsidies develop to certain levels, they will promote renewable energy investment, however, when government subsidies exceed a certain level, it may produce a negative impact on renewable energy investment, and effect of the green institutional environment on renewable energy investment is mainly reflected through green credit; besides, increasing environmental taxes can promote renewable energy investment in sample intervals. Third, the impact of green institutional environment on renewable energy investment of large enterprises is more significant than that of medium-, small-, and micro-sized enterprises; however, the impact of government subsidies on renewable energy investment is mainly embodied in medium-, small-, and micro-sized enterprises. Fourth, during a period of high volatility (2012-2015), relationship between the green institutional environment and renewable energy investment (inverted "U-shaped") are different from that of 2007-2016. It indicates that the implementation of policies has increased the volatility of the level of the green institutional environment, which may lead to a negative impact on renewable energy investment.