Economics for Sustainability and Energy Transition Research Program (eSET)

The Economics for Sustainability and Energy Transition (eSET) research program addresses the pressing sustainability challenges facing China and examines their broader global implications. Grounded in rigorous empirical analysis and economic modeling, the program investigates the economic causes and consequences of environmental degradation and resource stress, as well as the key drivers of China’s emergence as a leader in clean energy industries. It aims to inform the development of effective, efficient, and evidence-based policy solutions.

China’s rapid economic growth has placed immense strain on its environment and natural resources, undermining quality of life and threatening its long-term economic growth potential. Balancing continued development with environmental sustainability has become one of the country’s most urgent priorities. As the world’s largest energy consumer and carbon emitter, China’s choices will significantly shape global sustainability outcomes. Its efforts to combat environmental degradation and promote clean energy offer valuable lessons for other countries navigating similar transitions.

Featured Research

Smoke stacks in China releasing smoke into a polluted sky.

Sustainability Challenges

China, like many other emerging economies, faces pressing challenges such as environmental degradation, resource stress, energy insecurity, and urban traffic congestion. In addition, rising climate risks are disrupting economic activity and threatening livelihoods. What are the underlying economic drivers of these challenges, and what are their broader consequences for growth, equity, and resilience? Research in this area also seeks to understand how households and firms respond and adapt to environmental stressors such as pollution, climate shocks, and infrastructure strain by adjusting their consumption, investment, and production decisions. Drawing on high resolution data and rigorous empirical methods, the program aims to generate evidence on the economic and social impacts of sustainability threats across regions and populations, as well as the mechanisms and effectiveness of adaptation.

Energy Transition

The shift from fossil fuels to clean energy is essential for addressing environmental pollution and climate change. China has emerged as a global leader in the development and adoption of clean energy technologies, including electric vehicles, solar panels, and wind turbines. A central question is whether this competitive edge stems primarily from aggressive government support or from underlying market forces, a debate that lies at the heart of trade tensions and policy discussions. Research in this area seeks to uncover the key drivers behind China’s clean energy growth. The findings aim to inform how other countries can navigate the energy transition and strengthen their positions in the global clean energy market.

Photo taken on July 16, 2021 shows a screen displaying real-time information of national carbon emission trading in Wuhan, Central China's Hubei province.

Policy Solutions

To address sustainability challenges and accelerate the clean energy transition, governments in China have implemented a wide array of policies, ranging from command and control measures (such as the shutdown or relocation of polluting firms) to market based instruments (such as emissions trading schemes). These efforts also include research and development subsidies to stimulate innovation and consumer incentives to encourage the adoption of clean technologies. Using theoretically grounded and empirically rigorous methods, research in this area examines how firms and households respond to different policy tools. A central focus is on evaluating the effectiveness, efficiency, and distributional impacts of various policy options to inform evidence based policymaking.

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Faculty

Shanjun Li Shanjun Li headhsot.

Shanjun Li

2026-27 Research Team

Jack Collison Jack Collison headshot

Related Publications

Barwick, Panle Jia, Hyuk-Soo Kwon, Shanjun Li, and Nahim bin Zahur (2025). Drive Down the Cost: Learning by Doing and Government Policies in the Global EV Battery Industry. NBER Working Paper No. w33378.

Barwick, Panle Jia, Hyuk-Soo Kwon, and Shanjun Li. (2024). Attribute-Based Subsidies and Market Power: An Application to Electric Vehicles. NBER Working Paper No. w32264.

Fischer, Carolyn, Chenfei Qu, and Lawrence H Goulder. (2024). Rate-Based Emissions Trading with Overlapping Policies. NBER Working Paper No. 33197

Barwick, Panle Jia, Shanjun Li, Deyu Rao, and Nahim Bin Zahur. (2024). The Healthcare Cost of Air Pollution: Evidence from the World's Largest Payment Network. Review of Economics and Statistics.

Barwick, Panle Jia, Shanjun Li, Andrew Waxman, Jing Wu, and Tianli Xia (2024). Efficiency and Equity Impacts of Urban Transportation Policies with Equilibrium Sorting. American Economic Review 114 (10): 3161–3205.

Barwick, Panle Jia, Shanjun Li, Liguo Lin, and Eric Yongchen Zou (2024). From Fog to Smog: The Value of Pollution Information. American Economic Review 114 (5): 1338–81.

Christensen, Peter, Patrick Baylis, Teevrat Garg, Shanjun Li, Gordon C McCord, Erich Muehlegger, Erica Myers, Emma Noble Smith, David S Rapson (2024). How to Spend One Trillion Dollars: The US Decarbonization Conundrum. Nature 634(8036):1050-1052.

Goulder, Lawrence H., Xianling Long, Chenfei Qu, and Da Zhang (2023). China’s Nationwide CO2 Emissions Trading System: A General Equilibrium Assessment. Conditionally accepted by American Economic Journal: Economic Policy. NBER Working Paper No. 31809.

Lai, Wangyang, Shanjun Li, Yanyan Liu, and Panle Jia Barwick (2022). Adaptation Mitigates the Negative Effect of Temperature Shocks on Household Consumption. Nature Human Behaviour 6, 837–846.

Greenstone, Michael, Guojun He, Shanjun Li,and Eric Zou (2021). China’s War on Pollution: Evidence from the First Five Years. Review of Environmental Economics and Policy, 15(2):281–299.

All Research

Featured Research

Sustainability Challenges

Energy Transition

Policy Solutions

Faculty

Shanjun Li

2026-27 Research Team

Jack Collison

Jun Gao

Zhiren Hu

Yuyang Jiang

Hongbo Li

Chenfei Qu

Feiyu Wang

Yaxuan You

Yongfan Zhao

Related Publications