Impact of government subsidies on total factor productivity of energy storage enterprises under dual-carbon targets

Government subsidies are an important means to guide the development of the energy storage industry. As countries around the world are increasing government subsidies to energy storage enterprises (ESEs), how to effectively utilize these subsidies has become a focus of attention. Based on panel data of Chinese 101 energy storage enterprises from 2007 to 2022, this paper examines the effectiveness of government subsidies in the energy storage industry from the perspective of total factor productivity (TFP). The results unveil that government subsidies significantly increase the TFP of ESEs. The positive impact of government subsidies on TFP exhibits a "cherry on top" characteristic, implying that the higher the ESEs' current TFP, the stronger promoting effect of government subsidies on their future TFP. Mediating mechanism analysis indicates that government subsidies enhance the TFP of ESEs by alleviating financing constraints and increasing R&D investment. In particular, government subsidies exhibit a stronger mediating effect in ESEs with higher previous TFP. Heterogeneity analysis reveals that both R&D and non-R&D subsidies improve the TFP, and government subsidies have stronger effects on the TFP of non-state-owned ESEs, larger ESEs, and ESEs in favorable financial environments. These findings provide insights for building a proactive government in energy storage industry and contributing to the achievement of dual-carbon targets.