Carbon Price Shocks and Electricity–Growth Resilience in China’s Low–Carbon Transition: Evidence from Production Networks

Carbon pricing is a cornerstone of climate change mitigation; yet, the cost shocks it creates may destabilize the electricity demand and complicate the low–carbon transition. This paper examines how carbon price shocks propagate through production networks and affect electricity–growth resilience at the region–industry level in China. Carbon price shocks can travel through production networks and destabilize the electricity demand, making it important to understand how these shocks affect the resistance and recovery of electricity–consumption growth. Using monthly electricity–consumption data for 26 provinces from January 2023 to July 2025, we construct an electricity–growth resilience index that captures both dimensions. We combine carbon–market prices with a multi–regional input–output framework to measure the network–based exposure to carbon price shocks. The estimates show that network–transmitted carbon price shocks are associated with lower electricity–growth resilience and that the network channel is more important than direct local exposure after absorbing region–month and industry–month shocks. The association is weaker in industries with a stronger self–generation capacity and in regions with a higher clean–generation share, but stronger in electricity–surplus regions, regulated industries, electricity–dependent industries, and highly energy–intensive industries. Quantitatively, a one–unit increase in the network–based carbon price shock is associated with a 4.612–point reduction in the composite resilience index; the corresponding instrumental–variable estimate is −3.160. The forward– and backward–transmission coefficients are −4.672 and 3.986, respectively. These findings are relevant to the coordinated design of carbon–market and electricity–system policies. More broadly, the results suggest that expanding clean electricity generation and managing the cost transmission along production networks can help buffer transition costs, supporting an orderly low–carbon transition consistent with Sustainable Development Goals (SDGs), including SDG 7 (affordable and clean energy) and SDG 13 (climate action).