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Amid accelerating climate change, energy systems face rising stress, yet direct evidence on the link between temperature exposure and energy factor misallocation remains limited. Using panel data for 281 Chinese prefecture-level cities from 2011 to 2023, we employ an elastic-net approach to estimate output elasticities and construct a climate-zone-adaptive index of energy factor misallocation, assessing how temperature exposure affects it and whether environmental regulation sets a moderating threshold. Baseline results reveal a U-shaped relationship: very cold and very hot temperatures increase misallocation, while moderate ranges reduce it. Energy factor misallocation is mainly driven by heat in the Tropical and Subtropical Zones, by extreme cold in the Warm Temperate Zone, and by both in the Mid Temperate Zone. A single regulation threshold is identified; only above this level does environmental regulation significantly mitigate the effects of temperature exposure on misallocation. These findings clarify how temperature exposure, as a salient component of climate-related risk, reshapes energy factor misallocation and inform climate-adaptive energy governance and targeted regulatory design.
Ma et al. (Wed,) studied this question.