The Impact and Effect Assessment of Public Policy on the

Development of the New Energy Industry

Lingyi Lin

Law School, Fujian University of Technology, Fuzhou, China

Keywords: European Union's Carbon Border Adjustment Mechanism (CBAM), WTO Compliance, Technical Barriers

to Trade (TBT), Climate Governance.

Abstract: As the global energy transition accelerates, governments worldwide have intro-duced policies to support clean

energy to meet low-carbon and sustainable development tar-gets. This paper analyzes the significance of

public policies in the growth of the new energy industry, focusing on analyzing key policy tools such as fiscal

subsidy policies, tax incentives, R&D support policies, market access policies, and regulatory policies. These

policies not only directly promote the market expansion and sales growth of new energy products by reducing

consumer acquisition costs and corporate operating costs, but also encourage companies to op-timize

technological innovation and product quality continuously. At the same time, R&D support policies provide

funds and resources for enterprises to encourage technological innova-tion and industrial upgrading. Market

access policies and regulatory policies maintain market order and encourage the healthy growth of new energy

projects by optimizing the entry envi-ronment and ensuring product quality. In summary, public policies have

played a key role in fostering the growth of the new energy industry and laid the foundation for achieving

sustain-able development goals.

1 INTRODUCTION

Energy transformation refers to the shift from fossil

energy systems such as oil, coal and natural gas to

renewable energy systems such as solar energy, wind

energy, biofuels and hydrogen energy. The global

energy transformation is advancing at an

unprecedented speed around the world, aiming to

achieve low-carbon and sustainable development

goals. First, the International Energy Agency (IEA)

predicts that the worldwide installed capacity of

renewable energy will expand by 50% year on year in

2023. By 2025, renewable energy is predicted to be

the primary source of power worldwide, with wind

and solar energy accounting for 95% of new

renewable energy output. (Liu, 2024). Secondly,

hydrogen energy, as one of the important clean

energy sources in the future, is receiving more and

more attention. Despite the cost and technical

challenges, it has great potential in energy storage and

renewable energy consumption. To this end,

governments have introduced policies to support

clean energy. For example, the United States

established the Inflation Reduction Act, while the

European Union fostered renewable energy

development with the Green Deal Industrial Plan. At

the 28th Conference of the Parties to the United

Nations Framework Convention on Climate Change

in November-December 2023, 118 countries

announced the "Global Renewable Energy and

Energy Efficiency Commitment" initiative,

demonstrating the international community's

commitment to energy transformation.

In the context of global economic transition, the

new energy industry is likewise fast growing. In

China, the new energy industry's market size has

progressively grown. In general, wind power and

solar technologies are at the forefront of global

development. The hydropower engineering

construction capacity and the design and

manufacturing capacity of million-kilowatt

hydropower units are the world's leading, and the

transmission technology is fully independent and

controllable. For example, China possesses separate

intellectual property rights for million-kilowatt third-

generation nuclear energy technology, and the

independently developed fourth-generation nuclear

power technology has been commercialized and

demonstrated (Yuan, 2023). Technological

innovation is the primary driving force behind the

Lin, L.

The Impact and Effect Assessment of Public Policy on the Development of the New Energy Industry.

DOI: 10.5220/0013985100004916

Paper published under CC license (CC BY-NC-ND 4.0)

In Proceedings of the 2nd International Conference on Public Relations and Media Communication (PRMC 2025), pages 13-17

ISBN: 978-989-758-778-8

growth of the new energy sector. According to Yuan

(2023), the Chinese government's support policies for

the new energy industry also provide a good

environment for technology research and

development. For example, in the fields of electric

vehicles, hydrogen energy storage and photovoltaic

materials, China has achieved many technologies that

are ahead of the international level. The new energy

industry chain covers multiple links from raw

materials to final applications, including upstream

resource development and acquisition of raw

materials, midstream production of key components

such as power batteries and photovoltaic modules,

and downstream final applications of related

products. These factors have contributed to the

worldwide shift to a low-carbon economy. The new

energy business is predicted to provide more growth

prospects as regulatory support and scientific and

technical advancements improve.

Public policies are critical to fostering the growth

of the new energy industry. On the one hand, the

government establishes a defined growth direction

and aims for the new energy sector by creating a

detailed industrial development plan. Meanwhile,

government departments encourage the development

of infrastructure to satisfy the rising demand for use.

For example, local energy bureaus and power

departments have widely increased charging piles,

hydrogen stations, etc. to ensure the coordinated

development of charging and swapping facilities and

new energy vehicles and improve user convenience

and user experience. On the other hand, government

agencies have adopted rules to increase market

oversight, promote the integration of new energy

projects with conventional energy, and encourage

new energy to engage in electricity market

transactions. The Ministry of Finance has

implemented incentive measures to decrease the

operating expenses of new energy firms through tax

breaks, financial subsidies, and other ways, as well as

to encourage enterprises to innovate and expand into

new markets. The Shenzhen Municipal Government,

for example, offers specific incentives for the

research and development of new energy firms to

promote technical innovation and worldwide

standards.

Based on the preceding material, this article will

concentrate on China and the United States, study the

public policies taken by the two countries in the field

of new energy, and assess the impact and effect of

various public policies on the growth of the new

energy sector.

2 THE DIRECT IMPACT OF

PUBLIC POLICIES ON THE

DEVELOPMENT OF THE NEW

ENERGY SECTOR

2.1 Fiscal Subsidy Policy

In recent years, the Chinese government has enacted

several fiscal subsidies to encourage the rapid growth

of the new energy industry. For example, the 2022

policy specifies that the purchase subsidy standard for

new energy cars would be cut by 30% from the 2021

level., but the subsidy reduction for vehicles in the

public transportation sector is relatively small, aiming

to support the green transformation of public

transportation (General Office of the State Council,

2022). In 2024, the Ministry of Finance of China

issued 22.933 billion yuan in new energy vehicle

subsidy funds, mainly for liquidation and pre-

allocation of funds to further promote market

development. To encourage people to acquire electric

cars, the federal government in the United States

offers a tax credit of up to $7,500 under the Inflation

Reduction Act. Through various fiscal subsidy

policies, consumer costs are reduced, and funds are

directed to high-tech, high-quality products, which

directly stimulates the sales of new energy vehicles

and encourages companies to optimize technology

and product quality.

These fiscal policies have directly stimulated the

sales of new energy vehicles by reducing consumer

vehicle purchase costs and effectively guiding funds

to high-tech, high-quality new energy vehicle

products. At the same time, these policies have also

prompted companies to continuously optimize

technology and product quality to meet market

demand. With the progressive collapse of subsidy

programs, corporations face increased market rivalry

pressure, forcing them to invest more in research and

development of key technologies in order to improve

product competitiveness and therefore maintain a

competitive position in the market.

2.2 Tax Incentives

According to the Chinese Ministry of Finance policy,

enterprises engaged in new energy power generation

projects (such as wind and solar energy) are exempt

from corporate income tax for the first three years

from the tax year in which the project generates its

first production and operation income, and the tax is

reduced by half from the fourth to the sixth year. For

the sale of self-produced wind power products, a 50%

PRMC 2025 - International Conference on Public Relations and Media Communication

VAT refund policy is implemented to reduce the

burden on enterprises (Ministry of Finance, State

Administration of Taxation, 2015). In contrast, the

federal tax credit in the United States is based on the

Inflation Reduction Act, and consumers who

purchase electric vehicles assembled in the United

States can enjoy a tax credit of up to US$7,500. For

vehicles with a certain proportion of battery materials

from the United States or free trade partners, the

credit amount can be increased to US$10,000. The tax

incentive policy directly reduces the operating costs

of new energy enterprises by reducing corporate

income tax, value-added tax, and other related taxes

and fees, reduces the financial burden of enterprises

and encourages them to increase R&D investment

and technological innovation. Tax relief for

purchasing new energy cars, such as the exemption of

vehicle purchase tax, has promoted the growth of

market demand. Since its implementation, this policy

has greatly promoted the sales of new energy

vehicles, and as anticipated, continued

implementation will have a positive impact on sales.

And by reducing the tax burden, companies can invest

more resources in research and development, thereby

improving product performance and competitiveness.

2.3 R&D Support Policies

To promote technological innovation and industrial

upgrading, countries have formulated different R&D

support policies for the emergence of new energy

industries. The establishment of national new energy

laboratories and research and development platforms

by the Chinese government aims to foster the merger

of industry, academia, and research while assisting in

the development and implementation of advanced

technologies. The National Development and Reform

Commission and the National Energy Administration

of China jointly released the "Implementation Plan

for Promoting High-Quality Development of New

Energy in the New Era" in 2022. It included several

policy recommendations, such as enhancing service

quality, guaranteeing the security of the supply chain

for the new energy industry, and streamlining project

approval procedures. In addition, the policy

encourages enterprises to cooperate with universities

and scientific research institutions to increase

investment in basic theoretical research. The U.S.

Department of Energy (DOE) also announced on

November 21 that the Advanced Research Projects

Agency-Energy (ARPA-E) announced a grant of $42

million to 15 projects to develop next-generation

semiconductor technologies to improve grid

reliability, resilience, and flexibility, to absorb more

renewable energy such as wind and light and help

achieve decarbonization goals (U.S. Department of

Energy, 2023). These R&D support policies directly

encourage companies to increase R&D investment by

providing funds and resources.

In summary, R&D support policies help the new

energy industry achieve sustainable development

goals. By conducting research, developing, and

implementing innovative technologies, the

government may direct the industry's transition to a

low-carbon and green economy. These rules provide

a growth environment for the sector as a whole in

addition to giving businesses the assistance they need.

3 THE INDIRECT IMPACT OF

PUBLIC POLICIES ON THE

DEVELOPMENT OF THE NEW

ENERGY SECTOR

3.1 Market Access Policy

According to the Opinions of the General Office of

the CPC Central Committee and the General Office

of the State Council on Improving the Market Access

System, to maximize the market access environment

for new formats and new fields in China, it is

imperative to encourage the development of a more

adaptable and robust access management mechanism

through standard guidance and scenario opening. This

will increase the efficiency of market access in the

new energy sector. Furthermore, the Chinese

government encourages local governments to

implement preferential policies, like parking and

charging for new energy vehicles, as well as to

dismantle local protectionism and create a single,

open market system to support the growth and

popularity of new energy vehicles, according to the

New Energy Vehicle Industry Development Plan

(2021-2035). In the United States, in addition to tax

credits and industrial chain reconstruction, access

policies that restrict the participation of foreign

companies are also adopted. On January 1, 2024, the

interpretation document of "Sensitive Foreign

Entities (FEOC)" in the Bipartisan Infrastructure

Construction Act officially came into effect.

According to its content, starting from 2024,

American clean energy vehicles using battery

components produced in China will not be able to

obtain consumer purchase subsidies; starting from

2025, American clean energy vehicles using key

minerals such as lithium, nickel, cobalt, and graphite

imported from China will not be able to obtain the

The Impact and Effect Assessment of Public Policy on the Development of the New Energy Industry

above subsidies. In May of the same year, the Biden

administration announced a 100% tariff on electric

vehicles imported from China and guided the

European Union to impose additional tariffs on

Chinese electric vehicles in June.

3.2 Regulatory Policies

In terms of regulatory policies, the implementation of

project approval and compliance supervision, the

strengthening of information disclosure

requirements, and the strengthening of supervision of

implementation are particularly important. First,

governments ensure the legality and safety of new

energy projects by setting strict project approval

processes and compliance requirements. For

example, China's National Energy Administration has

issued a series of policies on the construction and

operation management of photovoltaic power stations

to regulate the order of project development and

prevent improper behaviors such as "reselling road

permits" (National Energy Administration, 2024).

This regulatory mechanism helps maintain market

order and reduce resource waste. Secondly, the

government requires new energy companies to

regularly disclose information such as operating data,

financial status and environmental impact to the

public to improve transparency and public trust. More

importantly, regulatory agencies need to regularly

supervise and inspect the implementation of new

energy policies to ensure that various policies are

implemented. For example, in China, the National

Energy Administration emphasizes the supervision of

major development tasks such as the stable supply of

power coal and the grid connection and consumption

of new energy.

3.3 Green Finance Policy

Green finance policy refers to policy measures that

support environmental protection and sustainable

development through financial means, aiming to

guide funds to green projects. Its important tools

include green credit and green bonds. The core of

green finance policy is to establish a systematic

policy framework to support environmental

protection, address climate change, and efficient

resource utilization. China's 2016 "Guiding Opinions

on Building a Green Finance System" defined green

finance and outlined its objectives, stressing that the

financial sector should offer investment, financing,

operation, and risk management services for clean

energy, energy conservation, environmental

protection, and other areas. Green finance provides

financial support for energy transformation financing,

and guides financial resources to low-carbon and

transformation enterprises by controlling the degree

of financing constraints on different enterprises and

mandatory information disclosure, thereby improving

the allocation efficiency of financial resources (Chen,

Xu, & Wang, 2024). For example, the low-interest

loans obtained by the new energy vehicle industry

through green credit make enterprises more

competitive in expansion and technology research

and development. In conclusion, green financing

regulations have significantly influenced the growth

of the new energy sector indirectly, which not only

makes the sector more competitive but also

establishes the groundwork for accomplishing

sustainable development objectives.

4 POLICY EVALUATION

On the one hand, public policies effectively influence

the growth of new energy sectors. The relevant

government departments take the lead in promoting

technological innovation and creating a good

industrial development environment by formulating

clear development plans, and providing various

financial support and access policies. For example,

around 2000, the growth of the green energy sector

attracted the attention of the Chinese government.

The central government issued a series of support

policies to help the development of the solar energy

and photovoltaic industries, covering both the supply

and demand sides, involving different industrial links,

and providing a variety of policy tools, such as the

formulation of a national unified solar photovoltaic

power generation benchmark on-grid electricity price

in 2011; from October 1, 2013 to January 31, 2015,

the taxpayers sold self-produced electricity products

produced by solar energy and implemented a 50%

VAT refund (Geng, 2019). The above-mentioned

local government's active support policies have

opened up the process of rapid growth of China's solar

energy and photovoltaic industries, achieved large-

scale production in the field of photovoltaic cell and

component manufacturing, and created price

advantages in the international market.

On the other hand, there are phases to how public

policies affect the growth of new energy sectors.

According to the analysis of the new energy industry

chain, in the initial stage of resource development and

acquisition of raw materials, fiscal subsidy policies,

and R&D support policies play an irreplaceable and

important role, which can directly provide financial

support for enterprises, reduce the high cost of new

PRMC 2025 - International Conference on Public Relations and Media Communication

energy enterprises in technology research and

development, and not only alleviate the financial

pressure of enterprises, but also enable enterprises to

focus more on innovation and technological

breakthroughs (Xu, 2023). The production of key

components in the middle and downstream and the

application of downstream products are inseparable

from the cooperation of market access policies and

regulatory policies, which are usually accompanied

by the setting of technical standards. These standards

not only regulate product quality but also force

enterprises to carry out technological innovation to

meet the ever-increasing market requirements (Liu, et

al., 2023).

5 CONCLUSION

The new energy sector is growing quickly, and public

policy is essential to fostering technical innovation,

encouraging market competition, and upholding

industrial order. This study thoroughly examines the

various ways that public policy has influenced the

growth of the new energy sector and comes to the

following findings.

First, the fiscal subsidy policy effectively reduced

the cost of car purchases for consumers and directly

stimulated the market demand for new energy

vehicles. In addition, with the gradual decline of

subsidy policies, companies are facing greater market

competition pressure, which forces them to boost

investment in the research and development of core

technologies to enhance product competitiveness and

thus occupy a favorable position in the increasingly

fierce market. Secondly, the R&D support policy

provides companies with the necessary funds and

resources by setting up national laboratories and

R&D platforms. These measures not only encourage

companies to cooperate with universities and research

institutions but also encourage the development and

use of cutting-edge technology.

In addition, market access policies, regulatory

policies, and green finance policies, as indirect means

of influence, provide a clear direction for the

development of the new energy industry by lowering

entry barriers, optimizing resource allocation, setting

strict project approval processes and compliance

requirements, and guiding funds to green projects.

These indirect influences not only reduce corporate

financing costs, but also promote technology research

and development and market expansion.

In summary, the impact of public policies on the

growth of the new energy sector is multifaceted and

far-reaching. Through the comprehensive use of

financial subsidies, R&D support, market access and

supervision, and other means, governments can

effectively promote The growth of the new energy

sector and achieve the goals of economic

transformation and sustainable development. In the

future, nations should keep refining pertinent policies

to adjust to the quickly shifting global energy scene

and boost international collaboration to address the

issues posed by climate change together.

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The Impact and Effect Assessment of Public Policy on the Development of the New Energy Industry