The Effect of GDP per capita on Renewable Energy Production in China

Renewable energy is an important topic in China as the country experiences increased wealth and energy demand. Historically, hydropower has been a valuable source of renewable energy production in China, and will continue to be as the Chinese increase hydroelectric facilities by 2020. Using provincial level data from 1980-2010, this paper estimates the relationship between the percentage of hydropower production and GDP per capita. A linear-log fixed effects model shows that on average, a 10% increase in GDP per capita is associated with a .875 percentage point increase in hydropower production. This translates to a 4.99% increase in hydropower production relative to the sample mean. Increasing hydropower production as a percentage of overall energy production shows that hydropower is growing faster than other sources of energy as GDP per capita grows. This means that hydropower could contribute to mitigating pollution and energy security issues in China.