Abstract: In the past few years, the financial character of energy becomes increasingly obvious, and the volatility of energy price presents more complicated feature.An increasing number of researchers focus on the impact of energy price volatility on economic growth, social welfare and environmental quality, respectively. In practice, the increase of energy price will stimulate producers developing energy-saving technologies, which improve productive efficiency and reduce emissions simultaneously. Given that the environmental total factor productivity index (ETFP index) can capture the comprehensive performance of economic growth and environmental protection, energy price-induced technological change (PITC) and its impact on ETFP change in China are investigated. To this end, the hyperbolic distance function is parameterize in a tanslog functional form, where energy price is incorporated. Based on this distance function, ETFP change is decomposed into the three components including technical efficiency change, energy price-induced and exogenous technological change. The effects of energy price-induced to ETFP change is assessed using the dataset for 30 administrative provinces in China over the period 1995-2015. On average, the rate of energy price-induced technological progress at the national level is 0.22% in the past 20 years, and its contribution to ETFP growth is 4.16%. The spatial-temproal variations for PITC are also observed. In addition, the direction of energy price-induced technological change is capital and energy saving and labor using. For the output bias, it is SO₂ emissions reduction during the study period.Finally, some policy recommendations are also put forward on how to enhance China's energy price-induced technological change.

Key words: energy price, induced technological change, environmental total factor productivity, hyperbolic distance function