Critical Metal Price Volatility, Green Incentives and Innovation of New Energy Enterprises
LIU Yang, XIAO Qiyong, HAN Liyan, QIN Ping
School of Applied Economics, Renmin University of China, School of Economics and Management, Beihang University, Beijing Institute of Mathematical Sciences and Applications
Summary:
With the continuous breakthroughs and widespread application of new energy technologies, China has occupied a leading position in the global new energy industry competition, giving birth to a number of international giants in new energy equipment manufacturing. To promote the continuous innovation and further development of China's new energy technologies, fostering a favorable business and innovation ecosystem is crucial, ensuring stable and sustained returns for new energy innovation. Unlike traditional energy, new energy technologies such as photovoltaics, wind turbines, nuclear reactors, and new energy vehicles are highly reliant on critical metal materials. The geographically concentrated production and processing of critical metals, coupled with long delivery cycles, have caused significant price volatility, introducing uncertainty into the business ecosystem of new energy enterprises. This study examines how critical metal price volatility influences the innovation activities of new energy enterprises, aiming to provide practical insights for advancing China's low-carbon energy transition and high-quality development. Starting from the input of factors in the new energy industry, this study uses patent application microdata from listed companies across seven Chinese new energy sectors—hydropower, nuclear energy, wind energy, solar energy, biomass and waste-incineration power generation, geothermal energy, and new energy vehicles—spanning the period 2007-2022. The study delves into how critical metal price volatility impacts new energy enterprise innovation. Using negative binomial regression, the analysis defines innovation output as the dependent variable, measured by patent applications. By combining keyword identification with large language models on patent abstracts, the study distinguishes new energy patents, traditional energy patents, and resource-saving patents related to critical metals. The core explanatory variable is critical metal price volatility. First, a monthly critical metal price index for each new energy sector is derived through weighted calculations based on metal usage density. Then, the annual standard deviation of monthly price returns constructs the critical metal price volatility index. This study shows that critical metal price volatility significantly negatively affects new energy enterprises' patent applications. Compared with traditional energy patents, new energy patents are less affected and the impact is not significant. Notably, increased critical metal price volatility can motivate enterprises to develop resource-saving patents related to critical metals. Further exploration into the potential mechanisms at play uncovers two key aspects. On the one hand, the financing constraint effect and the precautionary saving effect are identified as the primary factors that lead to a reduction in enterprises' R&D investment in the face of critical metal price volatility. On the other hand, the roles of the government and the market provide insights into the direction of innovation. Government green incentives like environmental regulations, green finance development and new energy subsidies ease the negative impact of price volatility on new-energy-related patents. Meanwhile, enterprise competition prompts more resource-saving patents related to critical metals to reduce cost-fluctuation exposure and gain market advantages. Heterogeneous analysis reveals that as the new energy industry penetration rate rises, the impact of critical metal price volatility strengthens. Enterprises with high energy transition degrees and those in midstream and downstream of the industrial chain are more affected by such price volatility. The research findings have significant policy implications. First, China should enhance its global influence over critical metal resources and vigorously pursue circular economy development to strengthen the supporting role of resource-saving technologies in new energy security. Second, the government needs to accelerate the innovation of metal futures and other derivative product markets. Third, new energy enterprises should actively manage the risks of critical metal price volatility by using metal derivatives for hedging or entering into long-term supply contracts with upstream and downstream enterprises. Fourth, the government should actively promote financial market system reforms and develop a greater variety of green financial products. The marginal contributions of this study are mainly reflected in three aspects. First, this paper extends the research on factors influencing new energy innovation by focusing on critical metals, an important input factor in the new energy industry, adding a new perspective and data support. Second, the study broadens the boundary of the understanding of critical metals' importance in the new energy industry. Existing studies mostly focus on the macro-level constraints of critical metal resources on new energy development, while pay insufficient attention to their micro-level impacts on enterprises. This study shifts the focus to the micro-level of enterprises, elucidating the micro mechanisms of how critical metal price volatility differently affects innovation activities across energy types. Finally, this paper provides insights for both the government and new energy enterprises in promoting new energy industry development and formulating business strategies.
刘阳, 肖淇泳, 韩立岩, 秦萍. 关键金属价格波动、绿色激励与新能源企业创新[J]. 金融研究, 2025, 540(6): 152-170.
LIU Yang, XIAO Qiyong, HAN Liyan, QIN Ping. Critical Metal Price Volatility, Green Incentives and Innovation of New Energy Enterprises. Journal of Financial Research, 2025, 540(6): 152-170.
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